Asymmetric Investing – FAUG

First Trust has launched a series ETFs providing buffered exposure to SPY as of their target “maturity dates” in November (DNOV, FNOV), February (DFEB,FFEB), May (DMAY, FMAY) and August (DAUG, FAUG). I write today about the August series, focusing first on FAUG with a “maturity date” of August 21. As background, the return caps and … Read more Asymmetric Investing – FAUG

The “Three Fund” Portfolio Part 5 – Tax Considerations

My friend Frugal Professor asked me about the tax consequences of my portfolio choices. So let’s discuss those in the context of a standard Vanguard portfolio of VTI, VEU and BND. Qualified Dividends VTI pays a dividend of approximately 1.8% per year. 94% of those dividends are qualified, meaning they count as investment income taxed … Read more The “Three Fund” Portfolio Part 5 – Tax Considerations

The “Three Fund” Portfolio Part 4 – Asset Allocation

The final questions to answer in building an aggressive portfolio are: 1) how much to allocate to stocks vs. bonds, and 2) how to weight domestic stocks vs. international stocks. In other words, asset allocation. Domestic vs. Foreign Stocks I ran the domestic vs. international stock asset classes on PortfolioVisualizer’s optimization tool going back to … Read more The “Three Fund” Portfolio Part 4 – Asset Allocation

The “Three Fund” Portfolio Part 3 – Bonds

Having examined stock selection in Part 1 and Part 2, let’s turn our attention to bonds. The leading Total Bond Market ETFs are Vanguard’s BND and iShares’ AGG. There’s little room to optimize here as it really doesn’t matter which one you choose. When I run these ETFs in balanced portfolios using VTI/VEU and DGRO/DNL, … Read more The “Three Fund” Portfolio Part 3 – Bonds