A Look At My Own Mutual Fund Portfolio

As an example of the mutual fund topics we’ve discussed thus far this week, I thought I would mention my exact mutual fund investments and how I plan to grow them in the near future.

First of all, I have two separate goals with my investments. The first is for buying a second home roughly fifteen years from now. Our first home, which we are in the process of buying, is going to be on the small side and both my wife and I want a larger home than the ones we are looking at so that we can have an invasion of grandchildren when we’re older. The second goal is an early retirement, targeting roughly twenty five to thirty years from now, so that I can be retired or very close to it when my grandchildren are born. These goals, as you can tell, have one big thing in common: family. My family is central to my life and thus my investments are geared toward them.

So, here’s my entire investment portfolio, using approximate numbers for values.

I have about $45,000 spread out between two separate 403(b) programs (for those unaware, 403(b)s are basically 401(k)s for people who work for a non-profit or for an educational institution). In both cases, this money is in that program’s version of the Vanguard Target Retirement 2040. When I establish my Roth IRA this year, I will be directly investing in that fund as well. Since my retirement goal is singular – I want to retire in roughly 2038 – I realized that I would basically be balancing my own fund with this retirement date as a target anyway, so why not just let them balance it for me? These funds have returned very well for me so far, and I anticipate watching them grow over time. I may make a small withdrawal from one of them, as it is allowed to aid with the purchase of a first home, but it will be less than 30% of the total amount I have in the funds.

As for that second house fund, I have about $5,000 in the Vanguard 500, which I selected because it is highly regarded, it has a very low expense ratio, it has a very long history of solid returns, and it is very easy to track and follow the holdings. I put in a specific amount each month that should have me on track to reach $10,000 in the account by the end of the year, at which point I will reduce my contributions. Why $10,000? It is a round target amount that puts me on a healthy pace, and at that dollar level, Vanguard eliminates a quarterly $2.50 fee on your balance.

Next year, I will complement this fund by buying into a much more aggressive fund, the Vanguard International Growth Fund. This one will basically determine how nice of a house we’ll buy when we’re 42. I feel strongly that globalization is just beginning, but I also feel that this is an event that can lift America’s boat if we place ourselves well – I intend to ride it a little.

Why Vanguard? In a nutshell, Vanguard treated me very well as a beginning investor and they have fund solutions for everything I want to do. I agree with their investment philosophies, their customer service is stellar, and I see no reason at all to jump to another investment house.

So, this is exactly where I stand in the middle of my twenty eighth year. Hopefully, a picture of one person’s real investments might give you an idea of what you could be doing with your money.

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