Although I post my financial reports each month to keep myself accountable for my financial decisions, I have moved to summarizing my investments rather than listing all the details. My reports now simply separate my investments between retirement and non-retirement accounts.
An important part of anyone’s finances is how investments are allocated among stocks, bonds, or other forms of investments like real estate. It’s also important to look at asset allocation at a deeper level, such as the size of the company invested (large-cap, small-cap, etc.) or the type of bonds (municipal, corporate, etc.).
Continue reading for my investment account balances by investment as of May 31, 2009. I will also explain why I have invested as I have.
The investment in AIVSX was held in an Universal Transfers to Minors Act (UTMA) account until I graduated from college. At one point, I was adding to this account monthly until I realized that a front-end load of 5.25% was immediately reducing any return I was earning. In September 2004, the discount brokerage decided to start changing an annual fee for holding this account, so I removed the funds from the company immediately and moved it into Scottrade.
The investments in the iShares exchange-traded fund, Microsoft, and Akamai were made with free money from ShareBuilder. All three investments have lost money since I first used bonuses from Sharebuilder to dabble, but I can’t complain.
I joined my company too late after its initial public offering, so I did not qualify for stock options like many of my colleagues. I do, however, invest ten percent of my salary in company stock through a special discounted purchase plan. Originally, my intent was to sell each quarter’s lot of shares as soon as I qualify to do so, but the recession has brought the stock price down. I may be tempting fate, but I plan to wait until the end of the year to sell the shares I’ve accumulated since the price started decreasing.
My 401(K) is a hodge-podge. Unfortunately, there are not many low-cost options available. Even the lone index fund has high fees. When I originally started with the company, I chose one of the allocation-building options based on an “aggressive” risk profile, but I’ve messed around with the allocation too often without rebalancing. Studies have shown that 401(k)s perform better when employees leave leave them alone, so one of my goals for the end of the year is determine what I want my 401(k) to look like and stick with it.
Moving forward, I’ll include my investment portfolio with my monthly financial reports, but only at the end of each quarter. Even with Quicken, it’s difficult to properly calculate my investment performance (the internal rate of return), but I’d like to include some measure of performance each quarter.
Another investment-related goal for this year is to determine whether I should start investing in an education savings account or 529 for a possible future child’s education before knowing whether I will have children.