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The end of the year is time when we take stock of where we have been and where we are going. 2014 was a year of changes in our financial management. I inherited money from my father and we switched from managing all of our own investments to hiring a financial adviser. I'm not going to give out dollar values but we believe our portfolio is on track to lead us to a comfortable retirement. Here is what we have and how it is invested, along with the changes we've made this year:
This is a substantial account as I have been with the same firm for twenty years. For quite a few years the firm has contributed 5% of our salary to the 401k; prior to that, they contributed 4%. I've been contributing 15% of my pay for quite a few years but I really increased the value of this account this year. I got the first installment on my inheritance in June, so I had about that much money withheld from my pay and put into my 401k, in essence living off that tax-free money and shielding my paycheck from income taxes by investing it for retirment. The 401k is with Hartford Retirement and the funds I own are Delaware US Growth A (DUGAX), Franklin Total Return A (FKBAX), Janus Triton A (JGMAX), MFS Aggressive Growth Allocation A (MAAGX), and MFS Growth A (MFEGX), I put about one-third of the money in Franklin Total Return (basically a bond fund), and split the rest among the stock funds. Between dividends and increased value, I earned over 6% last year.
My husband's 401k:
This is a relatively small account. He has been at his job for about ten years but has only participated in the program for about five. The fees are high and the investment choices are low. I finally talked him into switching from investing in a money market fund to investing in a stock fund and of course the market then went down. Still I think the long-term potential is better with stock and the whole point of a tax sheltered account is to grow it.
We've had these account for several years and while we haven't often maxed them out, they are no longer a small part of our holdings. They are invested in Vanguard 500 Index Admiral Share (VFIAX) which went up over 15% last year.
Our IRAs were started years ago when neither of us could contribute to a plan at work. They were invested in the hottest funds of the early 1990's and had not been substantially changed since that time. Life and children got in the way of keeping up with the funds, and in general, they went higher every year, so things must have been ok, right? Upon doings some research, I realized that there were better options out there. We also made the decision to hire a financial adviser. He/his company put us into a portfolio of twenty-three different mutual funds. Looking at what they did, I can see where each fund plays a different role in the portfolio but I'm not going to list them all simply because typing all that would drive me up the wall. We bought into that portfolio in August and the share prices fell shortly thereafter. While dividends meant we earned a little money on this large portfolio, the share prices are not back to where they were when we bought. That, coupled with the fees we pay, makes me question the wisdom of using this adviser. We'll give it another year or two but if I don't see better results, we will go back to doing it ourselves.
My investment in Lending Club started out as a toy. I read about it online somewhere, thought the idea sounded good, and made a small investment. I tried some different strategies and read a lot and became more convinced this was a good idea. Before the end of the year I had also opened an account at Prosper. Between July and December, I earned $124 from money that had been sitting in a savings account earning almost nothing.
Savings Account:
We have a savings account at our bank, which, like most bank accounts, isn't paying much of anything. At the end of the year we had about two months living expenses in that account, which is about where we want it right now.
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