Thursday, March 31, 2011

Springtime Shopping Spree

Ah, spring. The air gets warmer, the sun shines, the birds chirp... and the cash rolls in.

March is always a big month for me, as it's when my company pays out bonuses, and I usually do my taxes earlier enough to be getting my refunds.

  • Bonus: after taxes and 401k contribution were taken out, my net was about $7,168.

  • Tax refunds: I got $1,266 from New York State, and $2,307 Federal

So that was over $10,000 that went straight into my savings account. My savings account balance has been rather high lately anyway-- I've been transferring $4,000 a month to my checking account to cover all the bills I'm auto-paying, but my after-tax income is a little over $5,000 a month, so my savings keep building up. I do like to keep a good cushion of cash on hand as an emergency fund, but I also want to make sure I'm investing as much as possible rather than letting too much money sit there earning an infinitesimal amount of interest. So I transferred $25,000 from my savings account to E*Trade and went shopping for mutual funds!

Here's what I bought:

  • 444 of SFSNX @ $11.25 $5,000.00

  • 495 of SFLNX @ $10.10 $5,000.00

  • 993 of BRLIX @ $7.55 $7,500.00

These 3 were new funds that I hadn't invested in before. I don't have a particularly sophisticated method for picking funds: I just use the screening tools they provide on E*Trade to narrow down a list of funds with high Morningstar ratings and low expense ratios.

I also added to my holdings of these two funds that have done pretty well for me over the years:

  • 224 of ICENX @ $22.35 $5,000.00

  • 163 of BRSIX @ $15.38 $2,500.00

We'll see if this ends up being a good choice-- ICENX was way up several years ago and then lost some ground. I'm not sure it now is the best time to be putting more money into an energy fund, but I decided to take a chance on it. And BRSIX did extremely well for me several years ago, and I sold some shares near its peak when I bought my apartment. It took a big hit in the recession, but has rebounded in the last year or so. Hopefully it will continue to do so!

I've always tried to vary my picks among large-cap, small-cap, bond funds, international funds, etc. so I wouldn't have all my eggs in one basket, and though I haven't been very scientific about it, I've ended up coming pretty close to the recommended asset allocation for someone my age, maybe a little more conservative than they suggest. And my performance over the last few years hasn't been too bad, sometimes a little ahead of the overall S&P 500 and never lagging too far behind, as you'd expect given I have a lot of index funds.

After all this, I now have an E*Trade portfolio with a market value of over $78,000 -- this is what I consider my "personal" investing portfolio, not including a separate Roth IRA portfolio or my 401k. When I first started using E*Trade over 10 years ago, I put a couple thousand dollars in and almost thought of it as "play money"-- it was real savings, but I felt like I was experimenting with investing in the stock market. I've tried various things over the years, like buying a few individual stocks and an ETF or two, but I've learned that I don't want to manage my account too actively or take any weird risks-- I just want to keep putting money in, reinvest the dividends and periodically check to make sure none of my funds are total dogs. There's no exciting get-rich-quick story here, but hopefully, the slow and steady approach will get me to my goals.


Single Ma said...

I like this kind of shopping spree. Woo Hoo!

Congrats on the bonus! Hope you plan to adjust your tax exemptions for 2011.

rallystocks said...

Good luck with those funds! How has your experience been using e-trade? I have heard mixed reviews.

Miro said...

Love the shopping spree and to finally see some of that abundant cash balance from your numbers go into some income generating investments.

I get a similar bonus with work, but am always annoyed that they don't take a 401k percentage out of it. It all balances out in the end, but it would mean my biweekly 401k contributions could be slightly smaller.

@k -- tax refunds are a lot about the number of excemptions you claim with your work payroll. More excemptions mean they withhold LESS taxes from each check. Most people claim 1 if single, maybe 2 if married. If you change that to 0 you'll have a bigger year end refund, but you'll also have more withheld each paycheck. It makes no difference in what you pay in taxes overall though.

Maybe our open wallet host here can write some tips for increasing our tax refunds through various deduction potentials. Some though, like having kids or buying a home, are expensive ways to do that...

Kinchan said...

Okay, not sure why you are even getting a refund. That's like giving the government an interest-free loan all year for the use of YOUR money. You should be sure to set up your W-4 with your employer so that you pay only the amount of taxes required all year and no more so that you do not owe any taxes on April 15 and you don't get a refund either.

This idea that you give the government extra money to use while you wait the whole year to get it back doesn't seem very smart. Go to and search for W-4 calculator. The IRS's worksheet will come up asking you questions to determine how many exemptions to take so that you get no refund but do not owe any taxes at the end of the year either.

It's your money...use it when you need it.

As for "investing" in mutual funds, I'm not sure you can really say that YOU are investing. You're giving money to a fund manager to invest for you. I read a great blog about this at which set me straight. I recommend reviewing it.

moocifer said...

You might get more stability in your investestments over the long term by designing wider asset allocation that tracks all financial asset classes, not just large company stocks. The S&P is not actually representative of the entire asset market or event the entire stock market. The Investment Answer, by Goldie, is a good book you might want to check into. (Yes, that book that got so much press earlier this year).

Financial Independence said...

Two facts, as food for thought:
- Only 202 of the 500 biggest companies in the United States in 1980 were still in existence 20 years later.
- On December 29, 1989, Tokyo's Nikkei stock average reached its all-time peak of 38,915.87. Twenty years later, the Nikkei has never again reached that level — and, in 2009, reached a new low of 7,054.98.