Category: Mutual Funds

To Think or Not to Think: The Financial Question

I hope you are all enjoying some crisp fall weather, wherever you are.

With my latest quarterly net worth check-in, I discovered that I have nearly doubled my net worth in the three years since I started tracking my progress! The beauty of compounding is at play here: The more money I have invested that is making me money, the more money it continues to make. It’s that simple!

Other than that, I want to update you on what I have been thinking about vs. what I have been (choosing) not to think about when it comes to my money lately. This is sometimes by design, as a behavioral finance trick. Each link in this list will take you to a category of articles on this blog for you to explore further.

  • Bank accounts—I think about them weekly, but don’t always check them that often. My checking account and regular savings account are my most visited; my two high-yield savings accounts are reviewed quarterly for my net worth update, and are regularly invested in whenever I have savings from a biweekly paycheck ✅
  • Budget—I don’t think about it as much as I used to; I have regular payments that aren’t accounted for in my budget ❌
  • Credit cards—I think about them a lot, sometimes multiple times per week. This is the primary focus of my finances: What am I spending and—when it comes time to pay the bill—how much do I owe? This is also a good way to prevent fraud, but your credit providers should be alerting you to any unusual activity ✅
  • Investments—I don’t think about them, but I check my Charles Schwab brokerage account periodically during market shifts (thanks for the heads up, AAII!) and review them for performance and potential deletions twice per year ✅
  • Retirement accounts—I don’t think about them because I check my progress quarterly, I have a system in place ✅

The aspects of my personal finance that regularly haunt me are my bank accounts and credit cards. These are top of mind since I handle them on a short-term basis, whereas my investments and retirement accounts are for the long term. The one area I need to improve is my budget, hence the “x” instead of the checkmark. At this point, it’s next year’s problem!

The state of my retirement accounts

My retirement accounts are doing well, especially when I don’t think about them! I still have my first 403(b) plan account with Vanguard from AAII, and it remains invested in the mutual funds I chose at the start of my retirement savings journey. My second retirement account is with Fidelity from my current job at Red Ventures. It’s a straight up 401(k), so now I have a fun collection of all these letters and numbers!

I’m actively contributing 5% of my salary to my Fidelity account on a biweekly pretax basis, meaning the money comes out of my paycheck before I even get to see it. Meanwhile, with my employer matching most of that contribution, I’m sitting on nearly $6,500 after over a year of steady contributions and positive returns!

I invested my Fidelity account in these mutual funds that were available to me, using the same weights I applied to similar funds in my Vanguard account: 30% invested in the T. Rowe Price Large-Cap Growth fund (TRLGX), 20% in the Fidelity Mid Cap Index fund (FSMDX), 20% in the Fidelity Small Cap Index fund (FSSNX), 20% in Emerging Markets II (ticker not listed) and 10% in the Principal Real Estate Securities Fund Class R6 (PFRSX).

When I invested in these funds back in fall 2024, two of them had higher expense ratios than I would like for my investments: the real estate fund’s was 0.81%, and the large-cap growth fund’s was 0.70%. My investing strategy is to find mutual funds or exchange-traded funds (ETFs) with expense ratios under 0.60%, otherwise we’re getting dangerously close to 1%, which is way too much to be giving any fund or money manager. Thankfully, the large-cap growth fund’s expense ratio has since decreased to 0.55%.

My petsitting venture

This year, I started petsitting cats and dogs. It took off when I started networking through the dogs, finding more animal friends to hang out with. My closest human friends also have some of the cutest cats ever, so I can’t resist spending scheduled time with them when they are required to pay attention to me 😂.

So far this year, I have made over $1,600 from this venture! Since I haven’t been as regular with saving this year as I would like, at the end of 2025 I plan to match the amount I’ve made from petsitting and move it into my emergency savings account.

When I initially drew up my rules for this savings account, I wanted to keep $10,000 in it at all times. However, I’ve learned since that I don’t really need that much money available, even for emergencies. I settled on maintaining my emergency savings at $7,000. In the current market environment, it makes more sense to keep money in my high-yield savings accounts so they can make more than the measly 0.01% interest my emergency savings will.

Some other financial decisions I made since we last talked:

  • I signed a two-year lease for my current apartment so I could lock in the increased rate of $1,450/mo. for the next two years to save myself another $50/mo. increase down the line
  • I chose my health insurance plan for 2026, and went with the lowest tier for around $30 per paycheck

I’ll be back in early 2026 for another portfolio review! Wishing you all a wonderful and safe holiday season.

More articles on rethinking retirement:
Retiring Early: Memoir or Fiction?
Should Young People Still Save for Retirement?
How Much Should I Contribute to My Retirement Account?

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Digging for VanEck Sustainable ETFs

As I gear up for my next portfolio review at the end of June, I poked around As You Sow’s website to determine if there were any new candidates for my sustainable investing strategy. I began by looking for any mutual funds or exchange-traded funds (ETFs) with fossil fuels grades of A or B. This produced a list almost exclusively of mutual funds, which I am not currently investing in. I started considering a few of them, until I saw their expense ratios. My cutoff for expense ratios is 0.60%, and many of these funds were above 1.00% or even 3.00%—anything this high is the same as throwing my investment dollars into a pit and lighting them on fire!

Not to be defeated by how difficult it has been to find investments that are actually sustainable, I looked at my Charles Schwab brokerage account to see how my current ETF holdings were performing. One of my ETFs in the green, but not the best performer right now, is the VanEck Biotech ETF (BBH). It has all A grades on As You Sow—making its positive performance even better knowing that by investing in this group of companies, I am not killing the earth! This got me thinking that VanEck might have some other good candidates for my portfolio.

At the VanEck fund family page on As You Sow, it displays all funds that are gradable in its database. Since I’m searching based on a high fossil fuels grade, I can see that grade in the last column on the list of funds and narrow my choices based on it.

The VanEck Semiconductor ETF (SMH) has all A grades except for gender equality, which is D. No surprises here, the technology industry has a long way to go before it is equal for women and all genders, but I’m looking for a gender equality grade of C or higher for my portfolio. The VanEck BDC Income ETF (BIZD) looked promising with all A’s but an N/A for gender equality since there wasn’t enough data for a grade. Technically this fits my strategy, so I went over to AAII.com to determine if it was a good fit based on performance and expense ratio in the ETF Evaluator. Though its performance has been steady, its expense ratio is an alarming 11.17%! That performance is certainly not worth 11% of my portfolio’s value, so this ETF is off the list.

I scrolled further until I found the VanEck Environmental Services ETF (EVX), with a fossil fuels grade of B. The rest of its grades are A except for—you guessed it—gender equality at C. This fits my strategy, so let’s all cross our fingers and hope the expense ratio won’t eat into all this investment’s potential …

This expense ratio of 0.55% comes in just below my cutoff of 0.60%! VanEck Environmental Services has earned a potential spot in my portfolio, as it also has average performance over the long term (grades of C) and an A grade for the most recent quarter.

I will perform a similar search to see if I can find anything better when it’s time for my portfolio review. I have a little more peace of mind knowing that there are some hidden gems that will fit my strategy—I just have to do more digging!

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A Look at Top Gender Equality Funds

I haven’t been thinking much about my investments recently. To be frank, there is a lot going on that demands my attention and my portfolio isn’t at the forefront of what I care about right now. I check my Charles Schwab brokerage account very infrequently, to the point that I have seen some green where there used to be red. This behavioral technique of looking at my account less has given me an illusion (or delusion?) of hope.

However, it has been a minute since I checked in with the sustainable investing world. My sustainable investing strategy requires a review twice a year, so I will be analyzing my portfolio at the start of the new year. One of my rules is anything I choose to invest in should have an As You Sow gender equality grade of C or better, since many of the promising candidates that I found in the past are lagging in that area. Only two of the five index exchange-traded funds (ETFs) in my portfolio have A grades for gender equality. So, I went to As You Sow to find the top gender equality funds with grades of A to see how they compare and if they’re suitable investments.

The top four funds on the list as of November 12, 2023, were the Impax Ellevate Global Women’s Leadership Investor fund (PXWEX), the Boston Trust Walden Balanced fund (WSBFX), the Green Century Balanced fund (GCBLX) and the Amana Income Investor fund (AMANX). All four have grades of A for gender equality and civilian firearms, meaning stocks held within the funds do not support the production of civilian firearms with their investments. The gender equality score looks at gender balance in the leadership and workforce of a company and equal pay for employees.

Here’s a breakdown of the gender equality score for Impax Ellevate Global Women’s Leadership:

The further score criteria analyze the holdings of the fund based on how safe a company is for workers, whether there is sexual harassment in any form, how the rights of employees are protected, if business practices are both ethical and compliant and how diverse the company’s suppliers are, including women-owned businesses. Gender equality isn’t just about women, it encompasses the well-being of all genders.

When it comes to the other As You Sow grades, these funds vary widely. Many have high grades for tobacco but are inconsistent on the prison industrial complex. Deforestation and fossil fuels aren’t as big of a concern for some of these funds either. Amana Income Investor has a military weapons grade of F, while the rest of its grades are A and B.

Every time I look at these As You Sow grades, I am reminded of the meaning of intersectionality, something I mentioned in a previous blog post about why I care about sustainable investing. Intersectionality is the acknowledgement that everyone has their own unique experiences of discrimination and oppression, considering gender, race, class, sexual orientation, physical ability, etc.

Though these funds are focused on investing in companies that are promoting gender equality, some seem to be literally missing the forest for the trees, with deforestation and fossil fuel grades of C and D. Just because a company is doing its part to change in one area of environmental, social and governance (ESG) doesn’t mean it will do so across the board. The impact of deforestation and fossil fuels on the earth is one of the largest contributing factors to climate change. In turn, the people who bear the brunt of climate change are those who don’t have access to resources needed to survive due to gender and class inequality, racial oppression, lack of physical ability and homophobia. Everything is connected, and we are all individually impacted by the world in our own unique ways.

Now let’s look at these funds using AAII’s Fund Compare tool. Something interesting I noticed right off the bat is that most of these funds were incepted in the late 1980s or 1990s. Most of the funds that fit my investing strategy are much newer funds on the market, so they don’t have as much return history to look at. The two funds with better return grades are also less risky compared to their category: Amana Income Investor and Boston Trust Walden, with category risk indexes of 0.89 and 0.90, respectively. Green Century Balanced and Impax Ellevate Global Women’s Leadership have poor return grades and are riskier investments compared to their category. This usually isn’t the case with investing: If you take more risk, you are usually rewarded with higher returns.

Unfortunately, none of these funds fit my current investing strategy. All four have expense ratios of 0.77% or higher, while my cutoff is 0.60%. When it comes to As You Sow grades, the only fund that comes close is Green Century Balanced, with just a military weapons grade of C dragging it down. I have said previously that gender equality will be the hardest category for funds to grade well in. It is the longest-standing, most deeply ingrained issue in our society, and will therefore be the hardest to counteract and eventually dismantle through investing. The rest of the grades for fossil fuels, deforestation, civilian firearms, the prison industrial complex, military weapons and tobacco are all for man-made, more tangible things that are somewhat easier to pinpoint and avoid. The act of isolating gender equality as an issue on As You Sow instead showed just how connected every aspect of sustainability is and, to me, makes sustainable investing all the more important.

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How Much Should I Contribute to My Retirement Account?

I know, a millennial talking about retirement—in this economy? I must be a fool to think I could ever retire at some point in the future. Will there even be a world when I retire? If there is, will there be enough Social Security left for me and the other elder millennials when our bodies are falling apart? (Who am I kidding? My body is already falling apart!)

Let’s talk logistics here: If you work at a company with an employer-sponsored retirement plan in place, you probably have either a 401(k), a 403(b) or a 457(b). Apparently, whoever came up with the numbers for these things thought they would be easily distinguishable, but let’s be honest, they all look like the same thing. Thankfully, that’s because they are similar vessels for your retirement savings with different labels on them.

If we think of the 401(k) as the generic version of an employer-sponsored retirement plan, the 403(b) is the version for nonprofit employers, charities and other public education organizations, and the 457(b) is for local government employees.

At AAII, we have a Vanguard 403(b) plan account that is eligible for employer-matched contributions after two years. When my two-year anniversary at AAII came around, I was faced with the decision of which Vanguard mutual funds to invest my future in. I recall reading very helpful commentary from our editor Charles Rotblut about his own Vanguard retirement account, and I looked for similar funds that would give me the proper diversification. (Remember the lessons Daniel Crosby and Michele Cagan shared on diversification?)

My 403(b) is currently invested in five mutual funds: the Vanguard 500 Index Admiral fund (VFIAX), the Vanguard FTSE All-World ex-US Small-Cap Index Admiral fund (VFSAX), the Vanguard Growth and Income Admiral fund (VGIAX), the Vanguard Mid-Cap Index Admiral fund (VIMAX) and the Vanguard Real Estate Index Admiral fund (VGSLX). But picking the funds was just the first piece of the puzzle.

Next, I had to determine the weight I wanted to give each of these funds. Following guidance from AAII, I chose to allocate 30% of my retirement plan to the large-capitalization asset class (this just means big stocks) via the Vanguard 500 Index Admiral fund, 20% to mid caps (medium-size stocks), 20% to small caps (the little guys), 20% to growth investments (they’re supposed to grow I guess!) and 10% to real estate (just for fun).

Here’s a breakdown of the funds and their weights:

Though there is money in my retirement account, I haven’t properly set up my pretax paycheck contributions. Up until now, I wasn’t able to afford the contributions. Everyone and their mother have told me I need to “max them out,” but this might not be possible for some young people just starting their retirement contributions.

So how much should I be contributing to my retirement account?

AAII matches up to 3% of my retirement contributions, so let’s start with 3% and see how that will affect my monthly income. Three percent of my biweekly paycheck comes out to $43.33, leaving me with about $1,400 per paycheck. This seems like a reasonable place to start. And when inflation takes a break, I can increase this percentage to make the most of my future money.

There’s so much more about retirement accounts that I have to learn, including how the taxes work, so stay tuned for more of my investing discoveries!

The Great Index Fund Diversion

Index funds have been on my mind for a while. A few years ago, I was talking to my family about investing and index funds came up as an easy way to start.

Index funds are groups of securities like stocks or bonds that you can invest in to get a bigger chunk of the market in your portfolio.

I had index funds in mind when I opened my brokerage account; I made sure that my broker had a good amount of no-transaction-fee mutual funds available. Index funds seemed like a great place for me to start investing, since I’m not yet comfortable investing at the individual stock level. I could get what I needed to diversify a portfolio with just a few funds, instead of trying to identify 20 stocks that would serve a similar purpose.

However, once I actually started to look at index mutual funds, I quickly descended into panic when there were so many barriers to entry: Minimum purchase amounts, especially for the socially responsible funds I was interested in, were sky high; there were institutional funds that I wasn’t sure I could even invest in as an individual (I found out that it depends on the fund); and there were funds that weren’t even open to new investors.

I used AAII’s Fund Screener to try and find something that would work for me but soon I was overwhelmed by all of the metrics I needed to apply to find what I was looking for. Which index should the fund be following? How can I find a fund that is actively socially responsible and not just investing in big corporations that happen to not, at this point in time, be treating the earth like a hotel? And how do I sift through the mammoth amount of 24,000+ mutual funds available to begin with?!

After about a week of screening and researching, I decided to take a step back.

This is essentially online clothes shopping but for index funds, so I tried to narrow my search to find the ones I like in my size. But I don’t want to force myself to fit into anything, and I definitely don’t want to invest in something that I don’t understand. I want to follow a strategy that doesn’t require any emotional breakdowns in the process!

One day when I’m more entrenched in investing, I’ll revisit index mutual funds. But for now, I’m going to focus my attention on index exchange-traded funds (ETFs). There are no minimum purchase amounts attached to these, and there are only about 2,700 ETFs to choose from, which should help narrow my search immensely. I’ll report back on how it goes!

I read this so you don’t have to! Investing 101 by Michele Cagan

I started reading at such a young age that it feels like I’ve been reading since I came into consciousness. Before I started reading by myself, my dad would read the Wizard of Oz series to me. But it was when he started the Harry Potter series that I took the first book from him one night and said, “I want to read this one.”

There were nights I would go to bed at 4:00 a.m. just to finish a book, on a school night no less! Nothing and no one could stop me, not my mom, my young eyes or the butt crack of dawn on the horizon. Reading is my preferred way to learn new things, so if you’re not a big reader, or don’t have the time for a whole book, you’ve come to the right place because I’ll be reading investing books so that you don’t have to!

“Investing 101” by Michele Cagan, CPA, is a book that my uncle gave me when I started working at AAII. Instead of reading it, I put it in my closet and never looked at it again—until now!

“Investing 101” offers a ton of entry point options for beginners. Cagan covers basic economics, stocks, bonds, mutual funds, exchange-traded funds (ETFs), styles of investing, investing in real estate, currency and commodity trading, education and retirement planning, socially responsible investing, how to create your investment portfolio and advice from professionals. If any of those aspects of investing interest you, Cagan does a good job of explaining things plainly but factually. If you click on any of the links in this paragraph, they will take you to a place on AAII.com where you can begin learning more about these investing ideas.

I was on alert for any descriptions of investing concepts that might help me build a portfolio, and Cagan introduces the concept of diversification. Diversification is an investing technique that acts as a safety net against how the economy might perform: “Different types of industries perform better during specific stages in the economic cycle. For example, some industries take off when the economy is expanding, while others actually profit more when the economy is in a slump. That means that investors can always find a way to profit in the markets, as long as they know where to look.”

Instead of trying to take a wild guess when certain investments will do well, diversifying what you hold in a portfolio means you won’t have to stay up at night thinking about how the economy will affect your investments. Instead, you can stay awake plagued by thoughts about the end of the world!

Some great advice Cagan included that I’m going to follow is to “avoid duplication. It is a waste of your investment monies to own multiple funds with identical objectives. It’s best to own just one fund in any particular fund category.” She also notes, “However, keep in mind that it’s usually not advisable to have more than six or seven mutual funds at a given time, or you can start to counterbalance your efforts to construct a strong portfolio.”

I gravitated toward the chapter on mutual funds and ETFs since investing in individual stocks right now is still intimidating for me. I think I could easily follow these guidelines that Cagan provides and start investing in mutual funds and ETFs. I’ll report back on how that goes!

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