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Investment Account Maintenance

About 4x a year I try to do some maintenance work on my investment accounts. Nothing fancy, mostly evaluating my asset allocation and making sure that I don’t have excess cash laying around.

My investment account maintenance work takes about 1 hour. I log into my brokerage accounts and take a look at how much money I have in each investment. Since I’m no longer contributing to retirement accounts I focus mostly on my private brokerage. In this post I’ll discuss my account maintenance workflow.

I hold investments at Fidelity, Charles Schwab, and Vanguard. I’ll focus on Vanguard in this post and tell you what I look for. Then I’ll discuss how I rebalance my accounts, as needed.

 

Investment Account Maintenance Workflow

I log onto each brokerage account (Fidelity, CS, or Vanguard) and take a look at my investments in the ‘summary’ screen. I write each of these values down on a spreadsheet to have personal records in case of any glitches.

The above screenshot is my private brokerage account balance inside Vanguard. It’s under the account overview tab and shows how much money I have in each investment. There are 4 different index funds and I have some money held in cash. Total account balance is $196,386.

$18,731 of that entire balance is held in cash, shown as the “money market fund”, also referred to as the “settlement fund”. I have this money set aside mostly as an emergency fund. It’s money that’s easy to access and I can transfer it into my checking account in 2-3 days.

Asset Allocation

From the above screenshot I have the following investment balances:

I like this mix of emerging stock market, international stock market, US stock market, and some tax-advantaged bonds. Since they fluctuate constantly due to market dynamics I need to rebalance occasionally in order to maintain my desired asset allocation.

Asset allocation is just a fancy term to refer to my personal desired percentage of each fund. For example, I may want 50% of my money in bonds and only 25% in international stocks. Here is what I actually want my ideal asset allocation to be:

  • VEMAX – 20%
  • VMLTX – 20%
  • VTIAX – 20%
  • VTSAX – 40%

If you tabulate these percentages I would have an 80% exposure to equities (stocks) and 20% to bonds. In that 80% of stocks I would have a 40% US exposure, 20% international exposure, and another 20% which is international but specifically emerging markets.

Do I need to be this specific? Probably not. I could make it much simpler by investing in a single fund. But I’m only 40 and having this kind of asset allocation helps me learn more about investing so that I can improve with time.

If you only invest in a single fund you would have no reason to worry about asset allocation. It makes life much easier.

Rebalancing My Investments

I keep nerdy spreadsheet to keep track of my asset allocation percentages. Some months my bonds will do better than stock. Other months my emerging market stocks will do better than my US stocks funds.

Since I add about $1k a month to my brokerage account from my disposable income I decide where to direct the money. If bonds have decreased in value then I direct that money towards buying more bonds.

Looking at my nerdy spreadsheet:

The red percentages indicate that I need to top off those accounts with a little more money in order to meet my asset allocation goals. VMLTX is down by 3% probably because of how the markets have been performing. I could add $5,686 to bring it up to my 20% allocation goal but that’s not necessary; no need to be that exact.

Automatic Investing

Vanguard allows you to establish an automatic investing feature. This is great because I can set it and forget it. I used to divert $1,000/month into my investment accounts. Some of it would go into each of the funds listed above.

Since I am earning good money doing all the things I do I have decided to increase this automatic investing to $2,300 per month or $575 every week.

The $575 every week gets divided up, the majority of it going to VMLTX and VTSAX which you can see from the screenshot above are slightly underfunded. The rest goes to topping off my emergency fund which I would like to keep around $30,000.

 

Delegating to a Financial Advisor

If you’re able to earn a good income and don’t want to worry about this headache then you can farm this out to a financial advisor. A financial advisor can handle all such tedious asset allocations and set up fund transfers for you.

Andrew at Modern Dollar is my financial advisor and he would be happy to take this over for me. But he knows that I’m a nerd and rather do it myself. In the future I will delegate such tasks to him. It’s one less thing for me to worry about. I also don’t have to worry about making a mistake.

For a flat fee of around $2,500/year you can have a solid financial advisor; someone with a fiduciary responsibility to you. To handle all your tedious financial tasks and report to you once or twice a year. Alternatively you can learn to do this all yourself. The Godfather has a course for those who are interested in creating their own financial plan and owning the work of managing their investments.

I earn $200-500/hour doing the income generating work that I do. I spend about 15 hours per year managing my own finances and investments. This comes out to nearly $5,000 worth of my time. Paying a professional to do the work at an even higher level of quality is worth the cost.

I highly recommend Andrew and he can work with anyone in any state. Chat him up and see what he can do for you.

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