2021 Reassessment of Portfolio

DISCLAIMER: I’m not a financial planner. The opinions stated in this blog post are my opinions based on my current financial portfolio and the hours of reading and research. I suggest everyone to also perform your own research since everyone’s financial portfolio are uniquely different.

Every two or three years, I evaluate and analyze my current financial portfolio. I take a deep dive into my credit cards, checking accounts, savings account, and even retirement accounts as well too. This analysis helps me understand my current portfolio but also helps me decide if I need to make any changes. The last time I did this (late 2019), I discovered that my online savings account was *only* giving me an interest rate of 1% whereas other similar online savings accounts was offering 2.2%! I transferred the majority of the principal to this new online bank and the interest income was worth the switch.

There’s not much I can do with savings account. Across the board, the interest rate for savings accounts have gone down to 1% or less due to COVID-19. Even CD rates are dismal.

For the checking account, I do see cash back incentives at various banking institutions in order to “get new customers.” In fact, I already have two checking accounts. Having more accounts provide no added value. And why do I have two? Apparently, opening a mortgage with this bank also required me to also open a checking account. If you Google enough, you’ll find out how a particular bank forced customers to open unwanted accounts in order to hit internal goals.

With credit cards, I’ve been pretty happy with what I currently have. I have three cards… one Visa, one MasterCard (MC) and one American Express (AMEX). I think everyone should have at least one card from each financial services (Visa, MC, AMEX) and that these cards provide some value. Also, everyone should pay off the card in full every month. Since I believe cards need to provide value, the card I use helps me with my goal of aspirational travel. If you look on YouTube, you’ll see many suggestions on “best (travel/rewards/cash back) credit card” videos. I listen to these every so often because they do a good job summarizing the benefits of the latest cards and how it compares to existing cards. Some people enjoy earning rewards benefits by maximizing credit card trifecta systems. Other people (like me) find that maximizing benefits is a chore and are content in just using one card that works towards a goal. In my case, my goal is still aspirational travel and I’m content that my current credit card earns me travel points that I can redeem later. Looking at other travel rewards programs that I am involved in, I’ve apparently also been unintentionally building up hotel rewards from a major brand too. To be honest, I was surprised I had so much (6 digits worth) that had not expired yet and my current membership level too. Because I had so much, I decided to apply for this hotel brand’s credit card and was approved. Let’s see where and what this card can do for me in the future.

This year I did a deep dive into my retirement accounts. I have a company 401K, Roth IRA and stock accounts that hold the employee stock purchase program (ESPP). I contribute the max amount to my 401K every year. My Roth IRA contributions vary mainly because of income limitations. Looking more closely at all my current funds that I hold, I realized that I failed to really consider the benefits between funds categorized as “growth, value, and blend.” Most of these selections were from quick Google searches of the best type of mutual funds and then cross referencing the recommended mutual fund against what was available to me. I am overall quite surprised at the selections that I made given the lack of information. I don’t think any of the decisions are bad but just surprising. I spent some time learning about the 401K funds available to me and then adjusted my portfolio and future contributions. With my Roth IRA, it’s a Vanguard account and have a lot more funds available to me. Since Buffet won the bet by using Vanguard S&P 500 Admiral Shares (VFIAX) as the tool to demonstrate the differences between active vs passive investing, I’ve been pretty intrigued at the concept of selecting funds that mirror the S&P 500. Going into a deep dive, I found that Vanguard more of these funds as growth, value and blend. In addition, there’s also ETF versions (VOO) of the funds. In addition, I also considered the expense ratio and tried to look for funds with lower ratios within my portfolio. Ultimately, I opted to adjust the retirement holdings to predominantly contain large cap value and large cap blend mutual funds.

If people are looking for a “set it and forget it” type of mutual fund, I recommend to evaluate three factors. 1) the type of fund… growth, value, or blend. 2) the market capitalization… large-cap, mid-cap, small-cap… as a proxy for risk and volatility factors. 3) the expense ratio. I think the large cap value like (VVIAX) or (VFIAX) with low expense ratios are worth the investment and should be a guaranteed buy in your retirement portfolio. However, each company’s 401K plan offer different funds but evaluating on the three factors should at least lead to a solid portfolio.

This turned out to be a really long post. I hope some of this helps you in the future.


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