My portfolio – March update

That market “panic” sure didn’t last long as the latter part of February and most of March turned all those frowns upside down pretty quickly. Since our last update, the S&P 500 is up over 8%. YTD, the S&P 500 is still down but the mood around the market has quickly changed from ‘the market is crashing’ to ‘all things are rosy again’. The truth is as always somewhere in the middle but the financial media often makes that middle point hard to see.

It’s a bit unfortunate for us long term savers that these market dips are often so quick that it’s hard to take advantage of them but it’s also one of the reasons that timing the market is so hard. At least we all got a few 401k and Roth IRA contributions at lower prices which is always a boost but sometimes I wish those lower prices stuck around a bit longer.

As noted by my post last week – I was lucky enough to get a decent raise and bonus which mostly went into my 401k as I bumped up my contributions for that week up to 50% so a lot of that money flowed into my retirement savings. I also have been diligently contributing my excess cash into some ETFs as well as increasing my cash contributions into my taxable accounts to reduce my excess cash. As noted last week – I am continuing my heavy small-cap contributions to reduce that shortfall. I also made some moves this month – moving some mid-cap cash into small-caps and moving some of my bonds into REITs. Both moves meant an overweight asset class flowed into an underweight asset class. All my ROTH contributions this past month also flowed into the REIT fund and will continue to do so until that shortfall is eliminated.

As mentioned last month – my goal was to get back up to 300k as fast as possible after the removal of 15k in cash for a future house down payment last month and I did that pretty quickly.

The 50% contribution into the 401k from the bonus check went a long way towards making a dent in that 15k removal and additional cash contributions almost replaced it entirely within a month.

I wasn’t expecting to get such an influx so fast and I still think it was the right move to remove the 15k in cash I had from some individual stock sales and then replenish it using tax-favorable options like the 401k contribution versus just keeping the 15k in the account and reducing my contributions in the future.

I’m still having a hard time finding great individual values out there with the market surge this month so my cash stockpile remains relatively high but I will continue my heavy monthly contributions into ETFs and mutual funds as always. I’m also slowly DCAing into taxable ETFs with my excess cash to reduce the amount of money I have sitting on the sidelines doing nothing but always like to have some excess cash on hand in case a good deal crops up like it did with Apple a few weeks ago when it was in the low 90s.

Let’s take a look at how the portfolio looks now after the big contributions and the market surge this month.

As a reminder – last month’s total stood at 273k, a decent reduction from the previous month which was driven by the market downturn.


Heavy contributions and a solid market return for the month drove an 11.7% month to month increase in overall total which brings us up above 300k again.

This month’s total stands just a few dollars shy of 306k which is nice to see. My savings rate for February was probably somewhere in the 60-70% range which was a big boost to the portfolio. Bonus months are always a great month to boost your portfolio total as the expenses for that month don’t change but the income certainly does.

My taxable account grew 13.5% month to month. There were some contributions there but a lot of it was solid market return on my securities. My tax-advantaged account had a 13.2% return which was a combination of the large contributions as well as solid portfolio returns.

My cash hoard declined 1.5% as I continued contributions into taxable ETFs. Keeping nearly 10% of my portfolio in cash certainly held my portfolio back this month as the market return was excellent. If that cash had been invested instead of sitting on the sidelines – I would have done a far better job this month in growing my portfolio. It’s a good example of why timing the market has its downfalls as cash on the side grows at 0% while the market can have 8% swings in the span of a month.

This is one of the reasons I have a max of 10% in cash in my asset allocation plan. This allows me some flexibility and fun money but also makes sure I don’t do something stupid like keep too much cash out of the market when I think the market may be overpriced causing me to miss runs like this one. I still think the market volatility is worrisome and the speculative aspect of market prices these days has gotten out of hand which is why I’ve been sticking near my 10% max these past few months.

The market can certainly keep going up and up and I’ll lose out a little bit by keeping money on the side in cash if it does. However, I like the safety margin a cash buffer allows me in case my feelings about the market prove true. Having cash on the side for any well valued securities that come around is a plus as well. Even if the overall market feels overpriced, there’s still probably deals that will emerge out there.

My cash % this month stands at 9.5% so below my 10% max.

In any case – this was as good a month as one can expect and it’s nice to be above 300k again. We’ll likely visit the 200s against sometime in the future with all this volatility in the market but all that means is that I’m buying at lower prices than today so that’s not a bad thing for those of us who aren’t retiring any time soon.

Now that the totals are out of the way – let’s take a look at the asset allocation. Last month, I was 3%+ off on my actual versus target on four out of seven asset classes so there’s still a lot of work to do there.

I’m still a bit off here but it looks like things are starting to get closer to where I want them to be this month. Months like this where the market swings a lot are always going to have an effect on asset allocation % as much as contributions will. The sales of Disney and UNH in December/January are still having a big effect on my large-cap allocation which was overweight before those sales and has been underweight since after the sales. Selling individual securities is always a pain when it comes to asset allocation which is why I generally buy for the long term but the valuation of those two had gotten out of hand and I was glad I sold when I did. Disney is still below where it was when I sold it(and still overvalued) and while UNH has climbed back to where it was when I sold it, I still feel it’s overvalued despite still having some exposure to it.

Let’s take a quick look where I am and where I want to be based on my asset allocation plan.

  • US Large Cap at 39.2% versus 42.5%(-3.3%)
  • US Mid Cap at 11.9% versus 10%(+1.9%)
  • US Small Cap at 8.7% versus 10%(-1.3%)
  • US REIT at 7.6% versus 10%(-2.4%)
  • International Developed at 17.1% versus 15%(+2.1%)
  • International Emerging at 6.0% versus 5%(+1%)
  • US Bonds at 9.6% versus 7.5%(+2.1%)

I’ve got a long ways to go here but things are definitely improving. I’ve taken my small-cap exposure which started at being 5.6% underweight when I started tracking to being 1.3% below target now. I went from 4 asset classes being 3%+ away from target to just one this month.

The two moves I made this month(moving some mid-cap money to small-caps and moving some bonds to REITs) helped with those two classes as did the heavy contributions into underweight classes. Selling some individual large caps and not replacing them is still an issue as I have to increase my large cap exposure in the coming months.

My international exposure has been too high for a while now and has actually increased since the start despite 0 contributions towards those classes. That has all been due to US under-performance. However both international classes showed a reduction this month as contributions finally started to catch up to them and the US market performed well.

As mentioned above – cash is at 9.5% of the portfolio and not reflected in the asset allocation graph above.

Just like last month – there’s still plenty of work to do to get to a point where I’m happy with the asset allocation. Due to market movements – getting all classes to be perfect isn’t going to be reasonable but I want to get a point where I’m within 1% of all targets sometime in the near future. Here’s what I plan to do to reach that goal.

  • Change my 401k contributions to a mix of large-cap and small-cap contributions.
  • Use excess cash or additional taxable contributions to buy attractively valued tax efficient large-caps or large-cap based ETFs in my taxable accounts
  • ROTH IRA contributions go entirely into REIT funds. Still have to max out my 2015 ROTH IRA before the tax deadline so that and the 2016 contribution means there’s plenty of ROTH room to get the REIT asset allocation up.

I don’t plan to make any massive moves this month as I often prefer to let new contributions get my asset allocation to where it needs to be as it’s easier. If anything, I might move some additional dollars from the bond fund into my REIT.

This was a solid month for overall return here and it’s nice to be back above 300k again in such a short time frame. I plan to really hit my contributions hard in the coming months and will track my savings rate starting this month as well to see where my savings rate is this year and where I can improve. March is a good month for dividends as well so I’m excited to see what my dividend employee can earn this month after a poor showing in February.

See you all in a bit for some more updates and happy saving to all!

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