I changed from having my money managed to doing it myself in 2020 after 5+ years of watching what the advisor was doing and determining that I could do it better than they were. I currently allocate among about 10 funds - generally looking to maintain a certain allocation in each type of fund.
I also chose to go with ETFs vs. mutual funds because I saw them as being higher liquidity with more transparency. I like that the ETFs can be sold at any time during the trading day as compared to mutual funds which only settle once per day and once you know the price, you can't action a trade.
My allocation is as follows:
- Large capital companies (50%): SPY (legacy holding - not buying), VOO (better with lower expense ratio), VUG and VTV (to allow me some opportunity to balance value vs. growth within the large cap sector)
- Medium capital companies (10%): VO
- Small capital companies (30%): VTWO (tracks Russell 2000), IWN and IWO (to balance growth vs. value in the small cap sector)
- International companies (10%): VEA (developed markets), VWO (emerging markets)
In total, I pay about 0.07% in fees per year now versus about 0.5% per year before when my money was being managed. Those fees could be less if I didn't have the funds that allow me to balance between growth and value. My returns have also been higher than they would have been if I had stayed with the advisor because the allocation has been more effective than that offered by the advisor.
To share my process, I have a spreadsheet that I use each month to check the allocation - when I am adding new funds or have new money from dividends, I allocate that to the sector that is underweighted to try and keep the allocation as close as possible to the target percentages. I haven't sold anything to rebalance (I'm trying to defer capital gains as long as possible), but I plan to sell the overweighted sectors first when I start unwinding the account.
