Tuesday, November 17, 2015

Portfolio Addition



Currently, my blog summarizes the activities in my taxable portfolio. As some of you know, most of my capital is stashed away in my tax-deferred 401k which I started when I was young and naive. The investments in my 401k are index & mutual fund based. Back then, I didn’t really know what to do, but I knew I had to invest. So, I picked a few funds.

Overall, the fact that I invested early, and continue to invest regularly (e.g. money automatically deducted from my paycheck, maxing out the limit, employer contribution etc), I did okay. It went up and down with the market. I ended up with some gains. However, I am making my asset managers very happy with the fees. While the cost of the funds are fairly low, they average out to be approx. 0.4%~0.5% of my portfolio total. So every year, I am essentially paying $400~$500 for every $100,000 in my account. Ouch!


Regardless of market outcome, these guys are taking thousands of dollars from me every year. Double Ouch!

Moreover, from my recent review of my DGI portfolio, which I managed (somewhat semi-passively) since August of 2014, I notice that it follows closely to the S&P index. Basically, I can emulate the performance, control the rate of my dividend income and only pay a one-time fee when I buy, or the occasional fee when I sell - which is not very often.

Now, being older (but maybe still naive), I am not so willing to pay the extra fees. So, last week, I transferred over a small portion of my 401k mutual funds into my 401k self directed brokerage. For the blog, I will create another portfolio name to distinguish the post/pre tax accounts.

This will be a slow process. I will slowly convert my mutual funds over. For now, let’s see how this would work out.

D4s

6 comments:

  1. Wow, being able to control your own asset is great especially you are older and wiser now. My work doesn't allow individual stocks. I can't wait until I get a hold of the money. :)

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    1. Vivianne, thanks for your comment. I don't know about being wiser since this may come back and bite me. If I manage it in small increments, I think it may work out. Let's see how it goes.
      D4s

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  2. Those are some high fees! It's like a bank 'maintenance' fee, they aren't huge, but they start adding up and overtime the compounding effect makes it worse.

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    1. Brian,
      Thanks for commenting.
      These are very high fees indeed. I am sure these fees can be reduced - but DGI investing isn't that much work either for even lower fees. This negative compounding makes me sick in the stomach!
      D4s

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  3. Congrats on deciding to move to your funds. Just like our compounding dividends ... the fees can really add up over time. I'm looking forward to seeing the new portfolio ... and I expect graphs and charts ;)

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    1. Chimp,
      Of course - there will be charts, plots and graphs. Can't go without them.
      Thanks for visiting!
      D4s

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