What’s in your retirement portfolio?

[Editor’s Note: This is an independent post written by Jack.
This post may contain affiliate links. Please read our disclosure for more info.]

What to invest in?

Once you land on a Risk Allocation that you’re comfortable with the next step is to figure out how exactly you want to allocate your investments. I can’t make that decision for you, but I have linked a couple books and blog posts below that I have found very helpful and used personally for guidance if you are unsure where to begin:

Jack@TeachFI’s Portfolio:

As you can see above our portfolio is a pretty simple one (five funds) at its core:

  • 55% U.S. Stock Index Funds (40% Large-Caps & 15% Small-Caps)
  • 20% International Stock Index Funds
  • 20% Bonds/Cash
  • 5% Real-Estate Investment Trusts (REITs)

You’ll notice we are strictly index fund investors – we do NOT pick individual stocks. One of the beautiful thing about index funds is that with we are quite diversified with only a handful of index funds – over 10,000 companies worldwide. Where it gets a little more complicated is deciding which retirement vehicle(s) to invest each of those funds in a way that reduces expenses, fees, taxes, etc. as much as possible. Combined our employers provide us with the ability to invest in a 401k, 457b, 401a, and TSP (military thrift savings plan); furthermore, invest within our IRAs, taxable brokerage account, and a savings account. Here is the breakdown of our portfolio:

  • Large-Caps Index Fund (S&P 500)
    • 401k, 457b (Roth) , 401a, TSP, & Taxable Account
  • Small-Caps Index Fund
    • IRAs (Roth) & TSP
  • Total International Index Fund
    • Taxable Account (we only keep this in our taxable account to take advantage of the Foreign Tax Credit).
  • Bonds/Fixed
    • TSP, Taxable, Savings
  • REITs
    • IRA (Roth)
  • Future Considerations:
    • Increasing our real-estate allocation by potentially investing in rental property, syndications, etc.
    • Moonlighting as a physician will enable my spouse to contribute employER contributions to a solo-401k.
    • Investing within our HSA (won’t be able to contribute to this after April during military years).

How Do We Keep Track?

Looking above you can see we are technically invested in 11 funds in addition to our cash. In a perfect world we could simply invest in our five-funds in one account and watch it grow. Unfortunately that’s not how saving for retirement works. Each of our retirement vehicles has different funds available with different expense ratios, management fees, etc. While our spreadsheet probably seems overwhelming at first glance, once you start to wrap your head around it you’ll see how comprehensive and informative it is. In addition to the name of each fund, its ticker symbol, there is also the following information:

  • Column A & B = the account(s) the fund is held in. 
  • Column B & C = If it’s held in taxable brokerage account we put the order of investing for tax-loss harvesting purposes.
  • Column D = When we invest in the fund. For taxable brokerage account the specific dates the most recent shares were purchased or sold.
  • Column E = Expense Ratios (ER) assessed by the fund manager.
  • Column F = Actual asset percentages.
  • Column G = Current $$’s in each fund.
  • Column H = Desired asset percentages.
  • Column I = Desired $$’s in each fund.
    • Based on total $$’s in all funds and desired asset percentages.
  • Column J = How many $$’s to add/remove from each fund to rebalance according to our desired asset allocation.
  • Column K = Since our portfolio is a combination of retirement and non-retirement accounts, rebalancing our portfolio is not as easy as buying/selling funds. I Column J to get a ballpark figure of where to start and then start adding/removing money in Column K
  • Column L = Calculates new totals based on changes made in Column K.

We generally rebalance as we add new money to our portfolio using columns I & J as guidance; however, we also have the “Actual %” cell blocks triggered to turn red if we are outside of the 5/25 Rule and will rebalance then as well by moving money within our retirement (tax-protected space).

A Simpler Version

Most people’s portfolios are much less complex than ours, and many are far MORE complex than ours. What if yours is simple, though? If you don’t have a taxable brokerage account, aren’t worried about tax-loss harvesting, have just a few retirement vehicles (or less), you may find our spreadsheet for tracking our 529 accounts far more desirable. In essence it’s just a two-fund portfolio (90% large caps / 10% bonds):

The cells are formatted to trigger to the color red if they’re outside of +/-5% of the desired asset allocation to remind you to rebalance; however, we just rebalance by following the “To Correct” column when adding new money.

Let’s reference Student 2 as an example. If we wanted to add $5000 to their 529 plan, we simply type it under “Added $$” in Column G and then Column J tells us how to allocate the the new money to reestablish a 90% stocks / 10% bonds allocation.

Putting It All Together

The above image is a what our spreadsheet looks like in its entirety.

Click Here if you’d like to make a copy of this spreadsheet and modify it for your own use!

Upcoming Video Tutorial

In the coming weeks keep your eye out for a video describing in more detail how we use both spreadsheets to inform us when adding new money to and/or rebalancing our portfolio.

What do you invest in and how do you keep track? What strategies do you use to rebalance your portfolio? Comment below!

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