After several years of quarterly updates, I stopped publishing regular updates to the PoF portfolio. My investments were basically on autopilot and unchanged, and I don’t know that my readers were getting a lot out of value from relatively frequent updates.
In those past updates, I also shared our spending habits, but after two to three years of tracking it closely, I stopped. I had a pretty good idea of what we were spending before I tracked it, using Mint and Empower confirmed what I believed to be true, and I don’t see a need for continued tracking of every expenditure.
It’s not like there’s been much to spend on in 2020 with travel on hiatus and most high-dollar entertainment options shut down.
Those updates also included excrutiatingly detailed blog statistics, a section that other bloggers may have found interesting, but one that most readers would likely skim past, and I wouldn’t blame them.
Much time has passed since the most recent 2019 2nd quarter update, enough changes to my investment portfolio have accumulated that I think it’s high time I share my current portfolio. No, that doesn’t mean I invested in a marijuana fund, although that would have made for a great segue!
What I’m Invested in Now
A lot has changed.
I left my anesthesia career. I moved to a different state. I spent time in Europe, South America, Central America, and Mexico. The worst pandemic in a century hit, bringing with it massive market swings and equally large financial uncertainty on a more personal level for many as our economies and employment models were disrupted.
Amidst the turbulence, I lost a million dollars and made it all back.
I do feel fortunate and have more than a tinge of guilt as I am able to ride this out comfortably and in relative safety. That’s not an option for millions of essential workers.
I continue to publish these non-essential blog posts, using the proceeds to support more essential efforts. In the spring, we donated $25,000 to COVID relief, and we granted a slightly larger sum to a wide variety of charities on Giving Tuesday. We continue to support the salary of a physician in Honduras via One World Surgery.
Before I lose the interest of the voyeurs out there, I’d best get to the investment portfolio. That’s why you’re here, right? To see our investments and find out what’s changed?
Here it is, with the balances divided by a factor to make it all add up to a cool million:
Below, I’ll give you an opportunity to download the template that I used to create this. If you’ve downloaded a spreadsheet from me before, I recommend upgrading to this one for several reasons.
One, if you add the no-cost “Stock Connector” extension to Excel, if you enter the number of shares you own, the spreadsheet will auto-update daily, or as often as every 10 minutes if you wish. There’s a bit of configuration in entering your ticker symbols and choosing the share value to display in the “Price” column, but it’s completely straightforward and shouldn’t take long.
Two, thanks to a reader suggestion, I’ve improved the formulas that add up all of your assets in each category so that if you add columns in the sheet, everything you add will be included in the summary. The old version didn’t work well if you added additional columns.
Three, I’ve added more account types, and you can add your own if you like by replacing what’s there with your own text.
Here’s the rest of the sheet:
Note that your template won’t have the “529 Global Equity Index” calculation box I’ve got in the lower right. I created that to determine the value of my kids’ 529 Plan investment choice. It doesn’t have its own ticker symbol, but it’s comprised of three funds that do, so I was able to set it up in a way that the spreadsheet would be auto-updated via the Stock Connector add-on.
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The State of The PoF Portfolio
Looking closely at the data above, a few things stand out to me.
I’m Underweight in International Stocks
As I painfully described in some detail, I had a tax loss harvesting fail in March of 2020 that resulted in me being unable to get back into the asset class that I was attempting to exchange, all due to a massive overnight price swing.
I did some periodic investing later in the year, but I actually put most of the proceeds of that sale into a real estate fund and a startup venture (Rebublic.co).
Having learned that, despite the attractive foreign tax credit, a taxable brokerage account may not be the best place to hold international funds anyway, I could easily do some rebalancing in my 401(k) or Roth IRA to get the numbers back in line with what I’d like to see.
I haven’t felt strongly compelled to make that transaction, but the end of the year and start of another is as good a time as any to tidy things up. Expect a future update to show something closer to 20% international stocks as opposed to the 12.7% I’ve got at the moment.
529 Plans are Listed
I generally don’t consider money invested in our 529 Plans as part of our retirement assets. They are a part of our net worth, as it is our money, but our boys will be the beneficiaries, and most likely, those funds will be used later on for their education or maybe even their future kids’ education.
Like any money that’s earmarked for a future purchase, for now, it does belong to us, so I decided to include it in the spreadsheet. I also wanted the template to have that option for those who are investing heavily into 529 Plans of their own.
You can choose whether or not to include them in your own version. I think it’s reasonable to consider 529 dollars as part of your legacy planning, and the money will presumably lower your expenses later on if you have kids who have yet to graduate from college.
There’s also the possibility that the cost of higher education will decrease or that a higher proportion of it will be government-funded. Your kids might not be college material or they may be have tons of college credits before starting and/or qualify for a bunch of scholarships. The money may end up funding your retirement, after all.
There could be a penalty and some taxes due on the earnings, but you’d get to keep most of it if you were to withdraw the cash for purposes other than education in the future.
Sitting on Cash
9.5% cash. That wasn’t the plan (until it was).
When I left my doctor job, we moved into a small home, anticipating we’d spend at least half of our time traveling, splitting time between the $90,000 house and our lake cabin when we were home in northeast Michigan.
That was pre-COVID. With the four of us spending roughly 23 hours a day together in one of these two little places, we started looking for something bigger that would give us the best of our two current homes in one place.
After more than two years of not finding the right lake home, we ended up with the next best thing, a 2.5 acre property with a vacant lot of about an acre on the lake and a good-sized home across the street. We plan to build on the lake in 2022, so we’ll continue to sit on cash until we put that money towards the new house.
Cruise Line Stocks
I picked these up mainly for the onboard credit for life. If you don’t know about that perk or know what it means to try and “catch a falling knife,” you should read this cautionary tale.
Fortunately, I bought more shares when the knives were laying on the floor, and my overall return has been decent on these. I’m not an individual stock picker, and this experience exemplified why I don’t like to go that route.
But hey, I’ve got complimentary cruise cash for life on all of the major cruise lines. I’ll see you on deck, free drink in hand when it’s safe to do so again!
Since the last update, I made one change in my desired asset allocation, shifting 10% of the portfolio from U.S. Stocks to Alternatives. Now, the target for U.S. Stocks is 50% (down from 60%) and the allocation to alternatives increased from 10% to 20%.
I switched things up as my appetite for both risk and cashflow has increased since leaving my day job.
I’ve always had a healthy (i.e. high) tolerance for risk. I’ve never held more than 10% in bonds. I normally don’t hold more than a few months’ cash reserves, either, although that’s clearly not the case at the moment.
I have found that, having exceeded what we need to feel comfortably financially independent, it’s easier to take chances from a psychological perspective. I can afford to invest money that I could lose completely, and if there’s a reasonable chance of impressive gains (as in the startup investment), it’s a risk I’m now more willing to take.
I used to say that 5% of the portfolio is plenty of “play money” for investing in single stocks, startups, breweries, or whatever you fancy. Maybe 10% at the most. However, that was assuming one is pre-FI.
Once you’ve got your 25x (or 30x or whatever number helps you sleep well) of expenses saved up, anything above and beyond that is superfluous. The extra can all be play money. Your worst case scenario if you make 100% awful investments that crash to zero is that you’re back to just being financially independent.
However, if some portion of your play money turns into a 10-bagger (an investment that returns 10x) or better, you could be contemplating how life might differ with an 8-figure net worth and perhaps one day find yourself signing the Giving Pledge. One can dream.
When working, I had plenty of cashflow. I didn’t want cashflow from my investments, especially the tax-inefficient kind (like dividends from a brokerage account).
I don’t have that consistent cashflow from a paycheck any longer. I’ve got a detailed drawdown plan, but I’ll admit that I’m more than OK with delaying that indefinitely.
From a behavioral finance perspective, it’s easier to spend money that shows up in your checking account than it is to spend money that results from the proceeds of selling some investments. Cashflow eases that burden.
I’ve long had cashflow from my brokerage account, but I’ve also added alternatives that provide steady cashflow.
I invested in a real estate fund from Origin Investments that aims to provide 6% in tax-neutral distributions annually. Soon, I’ll be adding a real estate fund focusing on single family homes (with a projected IRR of about 25% and substantial cashflow) to my holdings via an access fund offered by Republic.
I’ve also had good luck with my crowdfunded real estate investments, and I expect a couple more of those to go full-circle in the coming months, including the Alpha Investing deal I wrote about in the summer of 2019.
What I Left Out
Donor Advised Funds
In the past, I’ve left out the 529s, but it’s a bit of a gray area, and I wanted to show others that the option to include them is there.
What I didn’t include in this update is the balance of our donor advised funds. I have them with both Vanguard Charitable and Fidelity Charitable. The Vanguard DAF easily and quickly accepts appreciated funds from my Vanguard brokerage account, and I can make grants from it to my Fidelity DAF, which allows for smaller grants and has a better user interface.
December is an outstanding time to start a donor advised fund if you haven’t yet. Donate some appreciated Tesla shares before the end of the year and take the deduction on this year’s tax return.
Those balances are about $100,000 higher than they were when I achieved my DAF balance goal prior to retiring. This, despite having made about $70,000 in grants to various charities throughout the year in 2020 alone. Again, I thank you for your role in our charitable mission here at Physician on FIRE.
I own most of this website and a little bit of both passiveincomemd.com and thephysicianphilosopher.com. More specifically, I own portions of the online businesses that are based at those websites.
There is definitely value in these small businesses, but it’s difficult to gauge exactly what that would be. It’s not like shares are publicly traded. Most websites that are sold go for something in the range of 2x to 6x earnings, although there have been outliers.
If I were to include the value of these businesses on my spreadsheet, it would make me even more overweight in “alternatives.” I don’t necessarily view that as a bad thing, as I’m comfortable with a higher proportion of “play money” these days. However using something in the 2x to 6x range could give me a 7-figure valuation in this category, and I don’t want to count these chickens that may never hatch.
In the meantime, they do provide cashflow, and I can’t argue with that!
Download The Spreadsheet Tracking Template
Here’s what the template looks like without my increasingly complex collection of investments. There’s room for nearly three dozen individual positions. I entered the info for a modified three-fund portfolio with the addition of a REIT fund, investment real estate, and cash.
Email subscribers received a link to download this newest version of the spreadsheet in their inbox. If you’d like a copy, enter your info below, and I’ll send you a link to download your own copy to fill in with all of your investments.
You’ll be subscribed to receive emails from me, at least temporarily. If you don’t like that, you can easily opt out with a mouse click once you’ve got the file saved. But I recommend you stick around. You just might learn something!
29 thoughts on “The PoF Portfolio: What I’m Invested in Now”
Needlessly WAY TOO COMPLEX-a Bogleheads three or four fund will do better
*Might* do better.
My real estate investments have done rather well, and some of my other investments (like that in Republic.co) have the potential to do much better.
I am a big fan of the 3 fund portfolio. As I often say, it’s a great starting point and a fine ending point.
Curious if you’re able to share more details about the single family rental fund, including differences between the access fund and the fund itself. I’m also invested in Origin but the single family rental fund arena interests me too.
There’s a ton of information on Republic’s site, but as a third party, compliance dictates that I’m not supposed to say much of anything, including the name of the fund. The link should get you there once you qualify as an accredited investor (which you obviously do).
Thanks for the post. I’m just starting out as an attending. Maxed out 401k with target retirement fund. I also have a taxable brokerage account with a 90 percent index fund to 10 percent bond distribution. As per your profile and because of the tax inefficiency, do you recommend not including bonds in your taxable brokerage account. My thought was it would still allow for a good overall balance and avoid too much risk?
*90 percent low cost index stocks( total us market, international etc ) I meant to say
It seems like most people I talk to these days have “too much” cash. We all have our reasons and they are all different, but the final common pathway is too much cash.
I’m fine with too much cash for most of the reasons. Maybe the only one I would argue against is not having a system in place to invest regularly when you have a stable income and routinely have extra income at the end of every month.
It is especially hard to find fault when someone has everything else nailed down just right but has some extra cash sitting around. Extra might even be 5-10% of the portfolio total. If that helps you sleep at night, call it a barbell portfolio or an opportunity fund!
It seems like way too much, but in the grand scheme of things, it brings my bond/cash allotment up to about 17%, which is not an unreasonably high amount for a 45-year old dude like me.
In hindsight, I wish I would have shifted some bonds to international stocks in my tax-deferred accounts back when I made the TLH error to put things in better alignment with my investment plan. It’s not too late to do so, but it would have been a wiser move back in March as compared to now, hindsight being 20/20.
Excellent post, much appreciated.
Something I have run into on 529s…when is “too much?”
My point being, there is an obvious advantage to using a 529, but the advantage dwindles once you have more money in it then college expenses. At what point do you start redirecting that money to a different account type? Or do you intend on saving that money for grandkids/cousins etc and allowing to compound for an extended period?
That’s a tough call. I think as long as the state of Michigan continues to give me a state tax deduction, I’ll keep contributing. Like you say, the money could always be used for grandkids.
Right now, I’m only putting in a total of $10,000 (the max that I can deduct) across multiple 529 accounts — most of it into my own kids’ accounts, but also putting some into accounts for relatives as birthday and Christmas gifts.
I like how you felt the need to include the definition of “10-bagger.”
Thanks for the update.
I try not to make too many assumptions.
10 years ago, I guarantee I didn’t know what that meant. If someone told me they nabbed a 10-bagger, I’d have thought they shot a 10-point buck or something.
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thanks for making this spreadsheet! I’m a spreadsheet guy so I made some modifications but you set the foundation for me. I’ve created formulas so I can see a quarterly change in the balance between each of our retirement accounts, as well as the change in the balance. I don’t subtract out contributions but it’s fun to see several quarters where the balance grows by more than 10% quarter over quarter
Those are some mighty good quarters! Made up for Q1, 2020.
Only interesting move i made was to trade some FCNTX for FLPSX. Thought this would enable me to diversify as my tech investments have increased. It is 40% international.
Tech has done quite well this year!
Your portfolio is much more varied than I expected! It’s fascinating to see breakdowns like this, and also very entertaining to read the story behind each acquisition and venture.
I like the visual of picking up knives from the floor, and can’t wait to read about the lakefront house that lies in your future. I have a dream that one day I’ll be able to see some body of water from my bedroom window.
Any thoughts on the pros and cons of ocean front vs lakefront?
Oceanfront versus lakefront — that could easily be an entire blog post!
Off the top of my head, both offer great views and usually some ability to swim and/or play in the water.
Pros of oceanfront include better surfing, often better beaches, and in many cases a more temperate climate. Cons would be the damage the winds, waves, and saltwater do to an oceanfront home, the danger of the undertow, and the inability (in most cases) to have a dock. You’re also more limited in terms of geography. Most states don’t have oceanfront, but they all have lakes, some much more than others.
Lakefront homes aren’t battered by the weather, are far less likely to be in a hurricane’s path. You can usually have a dock and a boat right off the home, and you can go fishing, waterskiing, or have happy hour on the pontoon easily. The water isn’t salty, and the waves are generally calmer. No tides to deal with, either.
In Michigan, we don’t have much of a choice, but in some ways, the great lakes offer a mix of the aspects of the two. I live a couple miles from Lake Huron, but we’re more interested in an inland lake nearby. There are far more recreational opportunities, the water level doesn’t fluctuate, and the waves are calmer as compared to Lake Huron.
I have to spend more time lakeside. I have some really fond memories in college of spending a legendary bachelor party at a lake house outside of Charlotte. I remember all those great qualities you mention. Since then, all I read about lakes are the occasional stories about brain eating amoeba and boating accidents.
My wife’s much more of a Californian ocean lover. After Covid we’ll have to do some lakeside exploring to make sure we are exploring all our future options.
The amebic encephalitis only comes from warm, stagnant waters. Think ditches and small lakes down south; most cases have occurred in Florida and Texas.
Amoeba can be an issue further north if you drink lake water by the gallon, though. That can give you the dysentery.
On the other hand, no there are no great white sharks or sharks of any kind, sting rays, jellyfish, electric eels…
Thanks for sharing all the details. I just opened up a couple custodial Roth IRAs for my kids. The number of accounts are getting a little unruly now.
Can you share how you went about buying a portion of passiveincomeMD and why he would sell a portion to you? Those kind of deals are always interesting.
In retrospect, would you guys have not moved into your existing house if you knew covid was coming? Or is all the extra cash preferred?
Personally, I still have dreams of living in a mega mansion along the beach ha. Watching Extraordinary Homes on Netflix too. Fun show.
I have yet to open Roth IRAs for my kids; I’ve got mixed feelings on the idea. Financially, it’s the right move. But I have a hard time justifying paying them as models since I can’t imagine actually hiring models for my images if I didn’t have kids, and they’re not yet earning income in any other way. When they’re a few years older and able to mow others’ lawns, clear snow, babysit, etc… I think that’s when I’ll pull the trigger and offer to match their earnings in a Roth IRA.
I detailed the PIMD purchase in this post: The WCI Network Expands! I had to twist his arm a little to squeeze out some equity, but I believe the cross-promotion and “street cred” from the network members has helped his business grow more quickly, especially early on. He’s done an amazing job with it lately.
I’m not dreaming mega-mansion, but in hindsight, I would have gone with a bigger home if I had known we’d be spending four seasons here due to the pandemic. Our current home was meant to be a landing spot and home base for us. It’s a bit tight for us as a year-round home.
Ah, fascinating! So you and Jim creating a network based off his site’s name (this is where I was confused, even though white coat refers to doctors in general), collaborate, and take ownership stakes in other doctor sites. A site owner will sell a portion of his site to gain access to the distribution benefits etc.
Seems pretty smart if you can work out all the profit sharing and synergies and stuff. But doesn’t it feel like a lot more work dealing with so many more people?
One of the reasons why I’ve stayed independent is because it’s more efficient for me. I don’t have to wait for anybody’s approval and I really like to just get everything done before my kids wake up. Having a business manager would be nice though, is that is the portion of blogging I don’t enjoy. There are just too many requests I really just want to focus on writing what I want, with money as a secondary benefit.
Given we’ve been locked down, I’ve spent more time on the business aspect. And I’ve come to the conclusion I don’t enjoy it much at all. It feels like and reminds me too much of work.
I really want to get some perspective on how you and others get motivated to make more money when you already have enough money. Grabbing low hanging fruit seems like a no brainer. However, when the quest to make money takes away time from my family I start getting annoyed so I stop.
How much is enough? After $11.58 million per person, the government takes 40% of it anyway!
PoF, tell me more about being able to grant from Vanguard to Fidelity. I was going to fund my fidelity DAF more with “exchanging” some Vanguard funds but didn’t get around to it this year because I got busy. I ended up just adding a lesser amount from cash flow because well life.
Having both but being able to move $ from a Vanguard DAF to the Fidelity one could make things much easier.
You simply make a grant from within Vanguard Charitable with Fidelity Charitable as the recipient.
In the notes section, be sure to denote that the grant is for a “specific project” and type out the name of your Fidelity Charitable fund and its account number. I was a bit nervous the first time, but it worked out fine, and I’ve done it a few times since.