Financial Update – Sept 2023

Another month, another update. A few random comments.

Good Reads/Listens/Watches

• Beau Miles tries his hand at replicating the Seinfeld (Kramer) aluminum can redemption arbitrage (link).
  • His other videos are astounding (link).
• Mediocre Amateurs continue to inspire me (link).
  • Dolomites 1 + Dolomites 2.
  • Kilimanjaro + Mount Meru.
• Clipping Chains interviews the White Coat Investor (link).

 

Life

• I got a bad case of poison ivy on my lower leg while playing disc golf. Would not recommend; 0/10 stars. The recovery lasted a good 4 weeks. Lesson learned: wear pants. I’ll do the world a favor and withhold the images.
• We chased the kids around a lot. Cross country, soccer, and ninja.
• I’m considering doing this $2,500 Wells Fargo bonus, which apparently expires in 4 days.
  • Has anyone taken the plunge on this in the past? Is it worth the hassle?
  • If Mrs FP and I could each do that, it would appear to be a pretty attractive offer.
    • I need to figure out how jointly owned accounts would work with this…..

Enjoying a glorious sunset while playing Kan Jam, our favorite lawn game.

 

This Month’s Finances

 

• The good:
  • Still employed.
  • Costco refunded us $180 from our recent washing machine purchase because it arrived with a dent in the back.
• The bad/abnormal:
  • We bought a $40k (net) Tesla Model Y LR (relevant blog post).
    • $1,500 for charger + installation.
      • Is this an automotive expense? Home maintenance expense? Given that it will stay with the home when we move, and presumably add some value to it, I arbitrarily classified it as “home maintenance.”
  • $82k in investment losses, which constitutes our 5th-worst investing month in dollar terms, though that is somewhat mechanical and unsurprising given our growing portfolio size.
  • • $400 in repairs for beater Corolla. New brakes, rotors, and transmission flush. Hopefully it will last another 100k miles.
      • A mechanically-gifted friend installed the brakes for me. In a former life, I would have done that myself but I’ve gotten soft.
  • $170 for allergy meds for unfrugal dog, purchased at Costco.

Footnotes:

1. Fidelity unambiguously has the best HSA on the market. $0 admin fees + cheap investment options (e.g. FZROX, FZILX, FSKAX, etc).
2. I lazily approximate home value as my historical purchase price.
3. I have a 15Y mortgage which results in much larger principal payments than a 30Y mortgage. Since principal payments are simply transfers from one pocket (assets) to another (debt reduction), I treat such cash flows as savings.
4. ~$0 cell phones described here.
5. All expenditures at Costco & Walmart are classified as “Food at home” for simplicity (even if it’s laundry detergent, clothing, medicine, toys, etc).
6. Nobody knows the perfect asset allocation. Just pick one and run with it. Use a target date retirement fund as a benchmark if you want some guidance (link). If you prefer to DIY (as I do), then a three-fund portfolio is great (link).
7. My low portfolio expense ratio is the primary reason why I don’t hold target-date funds, which have expense ratios anywhere from 0.16% to 1%. I can achieve a much lower expense ratio on my own, and it’s trivially easy to manage. Further, a DIY portfolio allows one to tax-loss-harvest more easily. Lastly, a DIY portfolio can help avoid the dreaded cap gains distributions caused by a fund-of-funds (e.g. Vanguard Target funds in Dec 2021).
8. ETF’s are slightly more annoying to hold relative to index funds. With ETF’s, you must deal with bid-ask spreads as well as the inability to buy partial shares (Fidelity now offers fractional shares). With a simple index fund, you don’t have to deal with either of these issues. Bogleheads discussion here (link).
9. I hold VTSAX in my taxable brokerage account because its tax efficiency (no cap gains distributions thanks to its patented technique).
10. CA’s 529 plan has the lowest expense ratio US equity index fund of any in the US (link). I’d have 100% of our 529 money there if not for the state tax deduction we receive in our own state.
11. My Collective Investment Trust (CIT) version of Vanguard’s Total Int’l Stock Index has a 0.059% expense ratio, yet produces 0.15% of “tax alpha” due to reduced foreign tax withholdings. Vanguard implemented this change around 2019. Therefore, I report the effective expense ratio of negative 0.091% for this holding (=0.059%-0.15%). The “tax alpha” shows up in the performance differential in the fact sheets here (CIT vs MF) and is more thoroughly explained here. Unfortunately, this 0.15% of “tax alpha” is not available in the mutual fund version.

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