To keep it brief, I’m 35 and currently working as a carpenter. I have been investing on and off for the past 20 years, but I don’t have much saved, about $70k across three stocks/funds: VTI (50%), FTEC (25%), and SWPPX (25%).
I am trying to figure out my next steps. I am in this for the long haul, but I am unsure if these three funds are the right fit for my goals or if I should make some changes. Should I continue dollar-cost averaging into these funds as I can, or is there a better strategy for me?
I am feeling really stuck in life right now, frustrated with work and my current situation, and I would love to take more proactive steps. I am aiming to invest between $500 and $1,000 a month when possible.
What you have right now is perfectly fine. If you’re in good health and don’t plan to retire soon, you might consider FBGC, which is similar to VUG. You might want to add some growth to your portfolio for variety.
The funds you have mentioned are great for long-term holding since they are well diversified. It might be helpful to clarify your goals first. It sounds like you want to leave your job, so your focus should be on making your investments cover some or all of your expenses. Consider exploring more about Financial Independence; Mr. Money Mustache is a key figure in that community. You can start with his website at www.mrmoneymustache.com/.
Basically, 25% of your portfolio is in growth (FTEC) and 75% is in broad market index funds (VTI+SWPPX). It’s flawless. However, I think it’s a little conservative. You are one year younger than me. I would rather invest at least half in growth and the rest in S&P 500 index funds.
While there is nothing wrong with any of your investments, increasing your monthly savings is the best way to increase your retirement income. As a result, your account will have more money to grow over time.
VTI and SWPPX will have significant overlap, making it akin to holding the same fund, which doesn’t provide true diversification. Essentially, a large portion of your investments is concentrated in broad U.S. allocations, which isn’t necessarily a bad thing.
FTEC appears to be a technology-focused fund. Check its largest holding and then compare that to the largest holdings in your other two options. How much similarity do you notice?
Some people advocate for including international funds, while others do not. I personally find value in them, but it’s ultimately your choice. Regardless, it’s beneficial to explore the “three fund portfolio” concept as a foundation for long-term investing.
I don’t think your selections are poor (though I would be cautious about FTEC), but you do have considerable overlap, and the performance of the funds is likely to be similar. You might want to consider merging your VTI and SWPPX.
It seems reasonable to combine SWPPX and VTI. You are also exactly right about FTEC, there is definitely too much technological overlap with the major holdings in the larger indexes. The three-fund portfolio suggestion is a wise way to streamline matters. I appreciate you seeing that and giving such a clear explanation.
