Feedback on portfolio

Hi all,

My wife and I finished Jeremy’s course a few months ago and I’m finally getting around to joining this community. Excited to be here.

So I’m looking for some feedback. We left our traditional advisor (and the 1% + fee) and now manage our money on our own. To do that, we removed the limited power of attorney they had to make changes and left the money with the same brokerage in the same assets. Our account is a taxable account. Our advisor had us in about 20 different ETF’s and Mutual Funds. To simplify things, my goal was to move as much as I could into a Target Date Fund. To avoid paying taxes on any gains, I’ve slowly been selling off anything we have that is at a loss and then investing those funds into a Target Date Fund. I’m making progress and now have about 20% of my portfolio in the TDF. We also deposit money in the account each month and invest that money into the TDF.

My question is this. I recently read that taxable accounts and TDF’s aren’t a good match because of the rebalancing and distribution of capital gains that comes with that. . Now I’m questioning if a TDF is the right approach. I was excited when a TDF was suggested due to the “hands off” approach- just add the money and let it ride but now I’m not so sure.

Am I better off looking at a total stock market and a total bond market fund instead of a TDF?

Thank you for any feedback.

Hi @SB011!

Congratulations on taking control of your investments and lowering your costs! Below is my personal view and others may disagree with it.

The reason why people have recently been voicing doubts about holding TDFs in taxable accounts is because this past year Vanguard’s TDFs payed out a massive taxable distribution. In my view, this was a one-off misstep that Vanguard made and not something that I would envision becoming a regular occurrence.

The pros of a TDF is that they are an inexpensive, diversified basket of investments that automatically rebalance and you can leave them alone for your entire working career. Depending on the platform, automatic investing into a TDF is relatively straightforward. The alternative would be using a three fund portfolio, with three ETFs. ETFs are more tax efficient, but would require you to rebalance yourself and likely manually add money.

So, it somewhat depends on your preference. But I have no problems with what you are currently doing!

I hope this helps. Let us know if there are any questions!

Great feedback. Thank you very much. Honestly, that’s the response I was hoping for.

I had posted on the BogleHeads SubReddit and that’s where a comment was made about TDF’s and taxable accounts not being a good match.

If there was a big difference between the 3-fund approach (which I really wanted to stay away from since there is more “work” involved) and a TDF I would have considered changing, but to hear that in the long run, these are very similar approaches makes me happy.

Thank you!

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