Last Week Stock Market (Feb 20-24, 2017)


Last week, Feb 20-24, 2017, the stock market was once again up. This being the fifth consecutive week the market has been up. The Dow (DJIA) closed at a record high for 11 straight days, which is the longest record streak since January of 1987. Friday the S&P 500 closed at an all-time high. Helping stocks move higher has been a better-than-expected earnings season, as the blended earnings growth rate for the S&P 500 is nearly 5%, and about 66% of companies have reported earnings above analyst estimates. International stocks also rose as better-than-expected manufacturing data was reported in the eurozone.

  • Zillow reports average home values are up 7.2% in past year to $195,300
  • New home sales up 3.7% in January, which is less than expected from economist
  • 24% of American’s have more credit card debt than emergency savings
  • 30-year fixed-rate mortgage up slightly to 4.16% this week from 4.15% last week (one year ago a 30-year fixed-rate was at 3.62%)
  • All-time low for 30-year fixed-rate mortgage was 3.31% back in November 2012 (all-time high for 30-year fixed was 18.63% back in October 1981)
  • The NASDAQ is up 361% from March 9, 2009 low
  • Fidelity Investments reports 55% of American households are at risk of being unprepared to cover essential living expenses in retirement

Last Week’s Stock and Bond Index Performance (Feb 20-24, 2017)

  • NASDAQ 0.1% (YTD 8.6%)
  • Dow Jones Industrial Average 1.0% (YTD 5.4%)
  • S&P 500 Index 0.7% (YTD 5.7%)
  • U.S. Aggregate Bond Index 0.6% (YTD 1.1%)

How did my retirement portfolio perform last week (Feb 20-24, 2017)?

Below is a snapshot of my three biggest retirement portfolio mutual fund movers (and losers!) in terms of percentage gained last week.

The below mutual funds are held within my work 401(k) plan as well as two separate Roth IRA plans. All accounts are held with Vanguard.

  1. Vanguard REIT Index Fund (VGSLX) 2.0%
  2. Vanguard S&P 500 Index Fund (VFIAX) 0.7%
  3. DFA U.S. Small Cap Value Portfolio (DFSVX) -0.7%

Can I Beat the Stock Market?

I am actually not trying to “beat the market” with my retirement portfolio…I am trying to match it. I do have alternative indexes in my retirement portfolio to help possibly beat the market, e.g. Small Cap, REITs, International, and Emerging Markets. With that said, if I can beat the market I will absolutely take it (obviously)! In the last 90 days my portfolio is up 6.07%, whereas the S&P 500 is up 7.52%. So I am just slightly behind the market, and this is the first time I am lagging in months.

I am a liberal arts major and I am my own financial advisor. My goal with this personal finance blog is to show all Millennial’s that you have the power to take control of your personal finances through self-educating on money and finance, and by striving to become financially literate. That is what I have been doing for years now, focusing on becoming financially literate, so I can one day become financially independent. I’m trying to prove to Millennial’s that we can all do this and thrive with money. Follow my blog as I highlight relevant personal finance topics pertaining to us Millennial’s.


Mutual Funds vs ETFs

Why I like mutual funds more than ETFs

I have been investing in mutual funds for over 10 years now. I’ve primarily invested in index funds and target date retirement funds. Last year I began investing in ETFs (exchange traded funds) for the first time. ETFs seem to be all the rage lately, especially with my Millennial generation, and they are very cost effective.

The cost is what intrigued me the most. Most mutual funds have two fund options; one for investors with $3,000 and another with $10,000. Obviously the latter is the one that charges the least in management expenses. Then there is the ETF, which typically has the same expense ratio as the mutual fund that requires $10,000 to open.

Fund cost comparison of S&P 500 index funds and ETF

  • Vanguard 500 Index Fund Investor Shares (VFINX) – Expense ratio = 0.16%
    • Requires $3,000 to open an account
  • Vanguard 500 Index Fund Admiral Shares (VFIAX) – Expense ratio = 0.05%
    • Requires $10,000 to open an account
  • Vanguard S&P 500 ETF (VOO) – Expense ratio = 0.05%
    • Requires the purchase of one share (like buying a stock), which is approximately $210 as of February 2017

Fund costs are what lured me in. But now that I am investing in an ETF, I have to admit I am not a big fan so far and here is why. I am huge on automating everything – from bill paying to savings. I do all on my investing via dollar-cost averaging and regular, bi-weekly investments. I love the “set it and forget it” mentality and so should all Millennials when it comes to investing.

Here is the catch…you can’t really invest in ETFs this way because it’s exactly like buying a stock and the share price changes constantly throughout the day. Instead I have to deposit money monthly into my money market account, then manually go into my brokerage account and purchase a set number of shares. Don’t get me wrong, that isn’t that challenging but its still much more inconvenient then the alternative.

I vote for mutual funds instead

You know how I invest in my mutual funds? I assign a specific amount I want to invest regularly, like weekly, bi-weekly, or monthly, and that exact amount is debited from my bank account and placed into my mutual fund. Once you connect your bank account to your brokerage account you’re essentially done. Then you just set up your automatic investment and you are done. No need to go back in and move the money from a money market to the stock market. You could in theory set this transaction up once and not look at it again for several months or a year. And that money still gets invested without any intervening from yourself.

Personally I am just not a big fan of ETFs. I prefer mutual funds as my investment vehicle of choice. I know many of my fellow Millennials strongly disagree with this premise so I would love to get your takes.

Average Retirement Portfolio Return


I was reviewing my retirement portfolio returns in Vanguard the other day and decided I wanted to share those results with my readers. I feel very proud of my returns over the years. For those of you who are new to my blog, I’m a liberal arts major, a Millennial, marketer by day, and my own financial advisor. Over the last several years I have dedicated virtually all of my spare time to becoming financially literate so that I can one day become financially independent.

Below are my average retirement portfolio returns over the last 10 years. Again, I am been my own financial advisor, managing everything myself. I feel my returns are above average, and on top of that, my overall expense ratio is 0.08%. The only actively managed fund in my retirement account is the 2040 Target Date Retirement Fund from Vanguard. But I am actually beginning to phase that fund out as well so I can focusing solely on low-cost index funds.

My Retirement Portfolio Average Annual Rate of Return

  • 10 years = 9.6%
  • 5 years = 10.0%
  • 3 years = 6.0%
  • 1 year = 12.7%

Average Annual Returns of the Vanguard S&P 500 Index Fund

  • 10 years = 6.94%
  • 5 years = 14.62%
  • 3 years = 8.84%
  • 1 year = 11.93%

I am happy to point out that my retirement portfolio beat the market last year and has over the last 10 years. I am actually not really trying to beat the market either. I am just diversifying via low-cost index funds, and index funds really just match the market. But I have diversified further over the last few years by adding Small Cap Value, REITs (Real Estate Investment Trusts), and Emerging Markets to my portfolio.

Next I would like to add more “Value” index funds to my portfolio. Value stocks of those out of favor with investors and therefor seen as a better value at the time due to their cost. This would probably be large cap since I already own so much small cap value. Two of the financial minds I listen to most are obviously Warren Buffet, who is a huge “value” investor, as well as Paul Merriman, who is especially partial to small cap value.

Average New Car Price

I recently read an article online the other day stating that the average cost of a new car is now just over $34,000. Believe it not, Edmunds expects that number to climb above $35,000 in 2017. Needless to say, cars are crazy expensive and these numbers are ludicrous.

The crazy thought is that the top four selling cars in 2016 were the Toyota Corolla, Toyota Camry, Honda Accord and the Honda Civic. All of those cars start at under $25,000. So why is the average so high at $34,000? My theory and probably a number of others is the very low cost of gas, which equates to larger SUV and truck sales.

The number one selling pick-up truck in 2016 was the Ford F-Series. A brand new 2016 F-150 Limited SuperCrew is about $60,000. So there you have it truck and SUV sales dramatically boost that average new car price.

If you purchase a $34,000 car at 2% APR over 60 months, you will pay $595 a month. That is a lot of money to throw at a car for 5 years. I’ve done a number of other related car post in regards to investing your car payment and the results are startling.

Millennials don’t fall victim to projecting your success via a nice, new, expensive car. It’s just not worth. Buy a used car for much cheaper and invest in an index fund instead so you can actually build wealth.

Motley Fool Million Dollar Portfolio Book Review

The Motley Fool Million Dollar Portfolio: How to Build and Grow a Panic-Proof Investment Portfolio

I recently read The Motley Fool Million Dollar Portfolio: How to Build and Grow a Panic-Proof Investment Portfolio, which is written by The Motley Fool co-founders David and Tom Gardner. Overall the book is a fairly good read for anyone who wants to take a more active role in their investment portfolio and retirement planning.

The Motley Fool Million Dollar Portfolio sort of flies in the face of everything I blog about for Millennial’s, which is that index funds are 100% the way to go when investing and planning for your retirement. I am very anti day trader and stock picking. I wholehearted believe you’re much better off diversifying your index funds instead of picking stocks. For example, own the S&P 500, Small-Cap Value, Emerging Markets, or REITs and you have a great deal of diversification in a number of sectors and asset classes.

The Motley Fool co-founders David and Tom Gardner built their company (The Motley Fool) on being great stock pickers. However, they are not day traders whatsoever. They are long term investors who try and invest in great companies for the long term, with the hopes of beating the market (the S&P 500). They actually have a great track record of doing so.

I regularly listen to three of The Motley Fools podcasts and that is what intrigued me about this book. I believe their podcast are a fantastic listen for all Millennial’s who want to continue their education on money, investing, and personal finance. I did glean some good stock picking insight from The Motley Fool Million Dollar Portfolio: How to Build and Grow a Panic-Proof Investment Portfolio and I think all you Millennial’s can as well.

David and Tom Gardner didn’t convince me to switch from index funds for my retirement portfolio though. I plan to “consider” investing in some individual stocks at some point down the line, but right now I am happy investing the way I am. I read Jack Bogle’s book The Little Book on Common Sense Investing and his philosophy is obviously index funds, considering he is the founder of Vanguard, my absolutely favorite brokerage account. But he doesn’t encourage all investors to have a small amount, roughly 5%, allotted to stock picking or anything else you consider “fun” in your investment portfolio. I side with Bogle on this one. But I’ll probably hold off even longer before I buy my first stock.

The Little Book on Common Sense Investing

Emerging markets funds zig when other funds zag

Emerging markets stock index funds are a fantastic addition to any Millennials retirement portfolio. If you’ve been following my blog you know that I have been a bit skeptical on internal funds in the past. I probably wrongly felt that domestic U.S. mutual funds were sufficient, considering just how much internal sales and business companies like Apple, GM, Coca Cola, etc. do.

Being Diversified…Globally-Speaking

I fully understand just how much “global” diversification helps a retirement portfolio. That is why I recently bought into Vanguard Total International Stock Index Fund Admiral Shares (VTIAX). My employer sponsored 401(k) retirement plan only has two international mutual fund options and both have high expense ratios (0.50% or higher). The aforementioned Vanguard fund (VTIAX) I bought into only has an expense ratio of 0.12% (89% lower than the industry average).

My wife and I both have a Roth IRA with Vanguard. Her account has been open for several years and therefore has a much bigger balance than mine because I just opened it in early 2016 to supplement my work 401(k). This allowed me to sell some other funds in my wife’s Roth IRA to buy into the Vanguard Total International Stock Index Fund Admiral Shares (VTIAX). She is also invested in Small-Cap Value and REIT index funds.

Emerging Markets Stock Index Funds

My next plan is to buy the Vanguard Emerging Markets Stock Index Fund (VEIEX) in my Roth IRA. I am currently invested in the Vanguard Target Retirement 2040 Fund (VFORX). As I said earlier, being diversified globally is proper diversification and will benefit your retirement portfolio greatly. I read a number of books, articles and I’ve listened to hundreds of podcasts on the subject. When paired with a portfolio heavily allocated in the S&P 500, international index funds, especially emerging markets, can help your retirement portfolio in a volatile, up-and-down market.

Come to find out, emerging market funds zig when other funds zag. Meaning emerging market funds don’t move in lockstep with blue-chip US companies. So obviously that helps with proper diversification by adding more variety to your portfolio holdings.

What Makes an “Emerging Markets” Fund?

Most emerging market index funds invests in stocks of companies located in emerging markets around the world, such as Brazil, Russia, India, Taiwan, and China. Roughly 80% of the fund would invest in actual emerging markets, while the remaining 20% would invest in developed countries. Approximately 70% would be invested in Asia, 15% in Europe/Africa, and 15% in Latin America.

Emerging market mutual funds tend to have an opposite correlation to the S&P 500 over the past several years. This is why I strongly advise all Millennials add an emerging markets index fund to their retirement portfolio. Approximately 15% in emerging markets would suffice.



The Elements of Investing Book Review

In the 2013 edition of The Elements of Investing: Easy Lessons for Every Investor, authors Charles Ellis and Burton Malkiel—two of the world’s greatest financial minds—have again combined their talents to produce a candid book about investing and saving. Written with every investor in mind, this reliable resource will put you on a path towards a lifetime of financial success.

This terrific entry-level book on investing comes in at only 203 pages, making it a very quick read. It really lays out the basics of saving and investing for your retirement and your future. It’s short and to the point, because really investing isn’t as difficult as most make it out to be. In fact, I believe investing is as difficult, or easy, as you want it to be. If you invest via passive index funds, it’s very simple. Target date funds are even easier yet.

Divided into six essential elements of investing, this little book packs a big message that can help secure your financial future all the way through retirement. Malkiel and Ellis touch on a variety of topics, from focusing on the long term instead of following market fluctuations to using employer-sponsored plans to supercharge your savings and minimize taxes. Along the way, they also address the best friends of any investor: diversification, rebalancing, dollar-cost averaging, and indexing.

One of my favorite excerpts from the book is the ‘Rule of 72’, which demonstrates how long it takes before an investment beings to double, e.g. the power of compound interest. If you 72 by the annual rate of return, investors can get a rough estimate of how many years it will take for the initial investment to double. For example, the rule of 72 states that $1,000 invested at 10% would take 7.2 years ((72/10) = 7.2) to turn into $2,000.

Written with every investor in mind, this short, plain-spoken “investment” book proficiently offers a set of simple, yet powerful thoughts on how enjoy the “winner’s game” approach to investing. All the investment rules and principles you need to know are here—with clear advice on how to follow them.


Last Week Stock Market (Nov 28-Dec 2, 2016)

Last week, Nov 28-Dec 2, 2016, was finally a down week in the stock market after a few good rallies, post the election of Donald Trump as our 45th president. The S&P 500 was down a full percent, while the NASDAQ was down 2.7%. Technology stocks were being sold last week, while financial services were being bought. Also, the November jobs reports showed well for the U.S. economy, with a healthy labor market paving the way for continued growth ahead.

Last Week’s Stock and Bond Index Performance (Nov 28-Dec 2, 2016)

  • NASDAQ -2.7% (YTD 5.0%)
  • Dow Jones Industrial Average 0.1% (YTD 10.0%)
  • S&P 500 Index -1.0% (YTD 7.2%)
  • U.S. Aggregate Bond Index 0.1% (YTD 2.1%)

How did my retirement portfolio perform last week (Nov 28-Dec 2, 2016)?

Below is a snapshot of my three biggest retirement portfolio mutual fund movers in terms of percentage gained (or lost, in this case) last week.

The below mutual funds are held within my work 401(k) plan as well as two separate Roth IRA plans. All accounts are held with Vanguard.

  1. Vanguard Extended Market Index Fund (VEXAX) -1.9%
  2. Vanguard S&P 500 Index Fund (VFIAX) -0.9%
  3. Vanguard Small Cap Value Index Fund (VSIAX) -0.7%

Year-to-date my retirement portfolio is up 9.4% (the S&P 500 is up 7.2% YTD). I am my own portfolio manager. I don’t have help from a Certified Financial Planner or Advisor. I was a liberal arts major and I do all my own research on investing by reading regularly. My philosophy is to use low-cost index funds and its been working for a decade.