So, I'm finally at a point where I think I'm ready to make a few changes in my portfolio. That is, I'm at a point where I'm ready to specify and pursue an actual directed investment strategy (40% small-cap, 20% mid-cap, 10% large-cap, 30% int'l is what I'm considering, although I'll have to do a bit more research as to optimum allocation). I am going into my senior year of college, economics major.
I keep running into two major issues with my portfolio:
1) Should I separate my IRA and my taxable portfolios? Or should I manage my asset allocation so that, when viewed as a whole, they achieve my desired mix? (I finally realized that this sentence is out of context with the rest of the paragraph - I was referring to the possibility of just buying into a mutual fund within my IRA. The difficulty with any sort of mutual fund and my IRA right now is that I simply don't have enough to buy into more than one - although I suppose I could go with an S&P500 index fund from Vanguard.)
2) How do I deal with transaction costs? This is by far the biggest barrier right now to me doing anything. I use USAA, which I really enjoy using both as a broker and as a bank. They charge $24.95 per trade for stocks, and $40 for most transaction fee no-load mutual funds I would consider looking at (Vanguard). The cost itself isn't a huge deal, but the amount of stocks/funds I would need to purchase to attain my desired level of diversification is. Even if I look at and eventually choose 4 or 5 mutual funds, that's still $200 in commissions.
I should also probably mention my general portfolio allocation:
35 shares of Boeing, market value ~$1175
140 shares of Sierra Pacific Resources, market value ~$700
Some # of shares of American Electric Power, I believe that the market value is around $13,000. (this is not currently under my control, it should be soon). My grandfather bought $1,000 of AEP stock when I was a newborn, it has since appreciated to that amount. That might be a bit conservative, last I remember $11,000 was at the stock's 3-year low; it was trading about $40,000 at the height of the last boom cycle; I think it should be trading around $25,000 or $30,000 at fair market value.
$570 in cash in a Roth IRA, after September to be $1,600 (this is the max contribution I can make this year, hopefully I'll make an extra $1400 in wages before year-end)
I am strongly considering selling the SRP, I don't know for sure about Boeing just yet. Neither are doing particularly well, but I'm going to consider my overall asset allocation before I sell either. I may sell some of the AEP so that I can balance out the rest of the portfolio.
So, I guess I am asking, what would be the advisable/wise route to take? I really should just go talk to a financial adviser, but I don't have the money at the moment.
Thanks for any thoughts you can offer up.
UPDATE:
I am leaving my IRA alone for now, just let it accumulate cash, no use using up $40 in commission when I only have $500 in there. I will decide this strategy separately after a few years, when I've earned enough money to do something with it. For now, I may use it to trade some companies for some light capital gains, but other than that, meh.
For my taxable portfolio, I have:
Vanguard Small Cap Index, NAESX, $3,000
Vanguard 500 Index, VFINX, $3,000
Vanguard Value Index, VIVAX, $3,000
Vanguard Small Cap Value Index, VISVX, $3,000
Vanguard International Value, VTRIX, $3,000
With $200 in commissions for initial purchases, dividends automatically reinvested.
I am keeping some money in a few DRIPs, as an homage to my grandfather and for some independent ownership.
American Electric Power, AEP, $2,000
Boeing, BA, $1,000
Glimcher Realty Trust, GRT, $1,000
I have neither the time nor the capital to do anything greater at the moment. Perhaps in the future, when I'm earning enough to add $12,000 a year to my portfolio, I can take a different approach.
I keep running into two major issues with my portfolio:
1) Should I separate my IRA and my taxable portfolios? Or should I manage my asset allocation so that, when viewed as a whole, they achieve my desired mix? (I finally realized that this sentence is out of context with the rest of the paragraph - I was referring to the possibility of just buying into a mutual fund within my IRA. The difficulty with any sort of mutual fund and my IRA right now is that I simply don't have enough to buy into more than one - although I suppose I could go with an S&P500 index fund from Vanguard.)
2) How do I deal with transaction costs? This is by far the biggest barrier right now to me doing anything. I use USAA, which I really enjoy using both as a broker and as a bank. They charge $24.95 per trade for stocks, and $40 for most transaction fee no-load mutual funds I would consider looking at (Vanguard). The cost itself isn't a huge deal, but the amount of stocks/funds I would need to purchase to attain my desired level of diversification is. Even if I look at and eventually choose 4 or 5 mutual funds, that's still $200 in commissions.
I should also probably mention my general portfolio allocation:
35 shares of Boeing, market value ~$1175
140 shares of Sierra Pacific Resources, market value ~$700
Some # of shares of American Electric Power, I believe that the market value is around $13,000. (this is not currently under my control, it should be soon). My grandfather bought $1,000 of AEP stock when I was a newborn, it has since appreciated to that amount. That might be a bit conservative, last I remember $11,000 was at the stock's 3-year low; it was trading about $40,000 at the height of the last boom cycle; I think it should be trading around $25,000 or $30,000 at fair market value.
$570 in cash in a Roth IRA, after September to be $1,600 (this is the max contribution I can make this year, hopefully I'll make an extra $1400 in wages before year-end)
I am strongly considering selling the SRP, I don't know for sure about Boeing just yet. Neither are doing particularly well, but I'm going to consider my overall asset allocation before I sell either. I may sell some of the AEP so that I can balance out the rest of the portfolio.
So, I guess I am asking, what would be the advisable/wise route to take? I really should just go talk to a financial adviser, but I don't have the money at the moment.
Thanks for any thoughts you can offer up.
UPDATE:
I am leaving my IRA alone for now, just let it accumulate cash, no use using up $40 in commission when I only have $500 in there. I will decide this strategy separately after a few years, when I've earned enough money to do something with it. For now, I may use it to trade some companies for some light capital gains, but other than that, meh.
For my taxable portfolio, I have:
Vanguard Small Cap Index, NAESX, $3,000
Vanguard 500 Index, VFINX, $3,000
Vanguard Value Index, VIVAX, $3,000
Vanguard Small Cap Value Index, VISVX, $3,000
Vanguard International Value, VTRIX, $3,000
With $200 in commissions for initial purchases, dividends automatically reinvested.
I am keeping some money in a few DRIPs, as an homage to my grandfather and for some independent ownership.
American Electric Power, AEP, $2,000
Boeing, BA, $1,000
Glimcher Realty Trust, GRT, $1,000
I have neither the time nor the capital to do anything greater at the moment. Perhaps in the future, when I'm earning enough to add $12,000 a year to my portfolio, I can take a different approach.
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