It takes a while to build a passive income engine. The challenge for most people, definitely including us, is that we have more goals than available capital. Putting aside priority and sacrifice, as covered in other posts, I wanted find a way to sustain broad progress.

I got discouraged seeing only a little here, or a little there, get allocated across the broad spectrum. On the flip side, when allocating to a single account or goal, I felt bad about other areas of our financial picture getting neglected.

As a few readers recently asked about more details on our accounts and the underlying components of those accounts, I thought this post would be useful to help explore how we’ve been able to find some personal success. It’s a balancing act: trying to live for today as well as prepare for tomorrow.

In a future post, we’ll look to explore some of these accounts and underlying assets in further detail. More importantly, it’s key to remember that these accounts, assets, and strategies are geared to our personal investment objectives.

As always, do your own research and consult with a qualified professional before making any investment decisions.

Background – The Balanced Dividends (Semi-) Automatic Ecosystem

We have a lot of different accounts and various account types. But for different needs and reasons. I try to keep things as simple as possible, or at least partially automated to enable easy management and maintenance.

Remember – each account is a unique slice of an overall portfolio with a specific purpose. We’ve shared some posts on the specific platforms we utilize, including Qapital and Fundrise. Here is a reminder of our wider account landscape:

What follows is an overview of what’s under the hood of our passive income vehicle.

The Main Engine: Non-Taxable / Retirement Accounts

The bulk of our net worth still remains in retirement accounts. As part of our 2018 goals and objectives, we’re still contributing to retirement accounts. But our larger focus is on increasing our taxable investments.

Within our retirement accounts, we have a mix Roth vs. Traditional accounts. Currently, roughly 1/3 of our retirement savings are Roth. Here is a more detailed review of each account and what we’re currently allocated towards or what we will be considering again shortly.

401(k) – Current Employer

US Mid-Cap Index Fund

I don’t know the name of this index fund within my actual 401(k). It’s a generic fund offered via my employer-sponsored retirement plan. You can find an equivalent fund via Vanguard, Schwab, Fidelity, or any other major investment company.

403(B) – Current Employer

Vanguard Small-Cap Value Index Fund (VISVX)

This belongs to Mrs. BD. As mentioned, we look across all our accounts and funds / holdings as a single portfolio. To balance out our other assets, this fund enabled us to diversify beyond our primarily US-based large-cap holdings.

Mrs. BD also has a decent retirement plan. But the expense ratios are higher than similar funds outside the plan. Fortunately, this particular fund’s fees are moderate.

403(B) – Former Employer

TIAA-CREF Growth Account (QCGRRX)

This account is sitting relatively idle as part of Mrs. BD’s prior employer-sponsored plan. We could roll-it to Vanguard, but it offers some diversification.

Quite frankly, we opted to leave it after forgetting about it for several years. This account holds a very, very small portion of our retirement balances.

Roth IRA

Vanguard Real Estate Index Fund Admiral Shares (VGSLX)

Formerly containing REIT in the name, VGSLX has been a core holding in our portfolio for several years now. Due to tax considerations, we hold this fund in a Roth account.

Receiving a distribution each quarter in my Roth IRA is very motivational – if qualified, the withdrawals will be tax-free. The account continues to grow and feed itself.

Vanguard FTSE All-World ex-US Small-Cap Index Fund Investor Shares (VFSVX)

This belongs in Mrs. BD’s Roth IRA. Part of our relatively limited international (non-US) exposure, we utilize this fund as a piece of our wider portfolio.

Again, it’s important to consider each account and asset as a part of a larger pie.

Traditional / Rollover IRA

Vanguard Equity Income Fund – Admiral Shares (VEIRX)

Not only does it have income in its name, VEIRX has enabled us to receive income derived from a number of equity names that the fund invests in.

Combined with steady, reoccurring savings over a considerable period of time, this fund helped us get to average over $1000 a month in passive income. The fund did help, but saving +25% of our income for years certainly helped as well.

To be clear, we are NOT currently invested in VEIRX as of a few weeks ago, but we anticipate moving funds back into this fund over the next couple of months. The reason for this is based on a personal investment decision outlined in the next fund covered.

Vanguard Growth and Income Fund Admiral Shares (VGIAX)

We leverage this fund for two purposes: (1) growth and (2) income. No surprise here, right? The name kind of gives it way.

As alluded to above, I recently moved a significant portion of our overall retirement savings to this fund from VEIRX. However, we’ll potentially look to reallocate back into VEIRX at some point in the near future.

While VEIRX remains a steady workhorse that we’ll utilize again, I wanted to try to gain a bit more of capital appreciation. Being a large cap blend (growth & income) fund, VGIAX overlaps a bit with VEIRX in terms of the underlying securities held in the fund.

Vanguard Health Care Fund Admiral Shares (VGHAX)

A smaller, but still relatively significant, portion of my traditional retirement account is currently in this allocation. I realized a number of healthcare names that I’d been interested in buying were covered in this fund.

Aside from our real estate exposure, we typically don’t focus on a specific industry or sector, but I liked some of the long-term capital appreciation potential offered via this fund.

The Auxiliary Power: Taxable / Non-Retirement Accounts

Our taxable accounts still only account for ~7% of our passive income. The bulk of our net worth is still also in our non-taxable or retirement accounts. However, we continue to make steady progress in this area.

The majority of new capital the last 10-12 months continues to be allocated to building out our taxable accounts.

Related: 5 Ways to Balance Account Types To Balance Life’s (Un)known Milestones

Acorns

Like other users of Acorns, our portfolio consists of a series of ETFs. Here are the core ETFs that form the basis of an Acorns portfolio:

Users can elect a portfolio based on 5 different investment styles, ranging from conservative to aggressive. As we currently elected to use the Moderate portfolio allocation, here is our current allocations across the above mentioned ETFs by asset type:

Robinhood

We’ve been using Robinhood since early 2016. Different account types are available, but we use the basic free version as part of our taxable investment portfolio.

AT&T (T)

After shopping for several months at the AT&T store, we ended up with 500 shares of T, which remains our only single name, dividend paying security. For now, we’re likely to hold onto the current position and not add any more shares.

It can be disappointing to see a substantial unrealized loss since our various purchases, but it does create buying opportunities. However, we do want to eventually add a second individual name that pays dividends.

Fundrise

We’ve been utilizing Fundrise since mid-2017. With a beautiful interface and excellent underlying investment opportunities, we continue to add to our positions with Fundrise.

Balanced Investing Plan

Fundrise offers a few different investment options or strategies; we currently utilize the Balanced Investing Plan, which (per the Fundrise site):

• Aims(s) to earn returns via a blend of dividends and appreciation
• Invest(s) in a balanced mix of income and growth strategies
• (Utilizes a) portfolio allocated across both debt and equity real estate assets

Despite being taxed at our ordinary income tax rate, we utilize our Fundrise for additional exposure to real estate. While not in a retirement account for us personally, Fundrise, like other real estate investments, generally, has two aspects: illiquidity and long-term investment horizons.

After our 6-month passive income check-point, we decided to continue to gradually add to our Fundrise investment.

Vanguard

Yes, I know. More Vanguard funds. It’s because it makes sense for us; we have the majority of our holdings with Vanguard.

Vanguard Wellesley Income Fund Investor Shares (VWINX)

As of now, this is most likely our fund for the “we-think-we-will-buy-a-house-some-day-so-we-need-a-down-payment” savings.

Most balance funds tend to have a larger allocation toward equities; we find the larger allocation of fixed income appealing for our respective investment objectives.

Vanguard Intermediate-Term Investment-Grade Fund Investor Shares (VFICX)

In our latest passive income & portfolio update, a reader asked what type of bond fund we use for a portion of our tiered emergency savings. This is it.

While certainly not possessing the safety of cash or a certificate of deposit (CD), we utilize this fund for our respective needs. The rest of our emergency savings are in our other Ally Bank accounts.

Wrapping It Up

At this time, we leverage different account types and asset classes to:

• Enable non-active contributing accounts the ability to grow over time
• Allocate a few new seeds for growth and/or futuristic opportunities
• Seek moderate to long-term capital appreciation as well as income
• Conserve adequate cash and/or short-term liquid savings to not deplete long-term investments

Overall, our portfolio is primarily geared toward a balance of growth (capital appreciation) and income (dividends &and other distributions).

Looking Back and – More Importantly – Ahead

Like most people, we have more goals than available capital – at least now. We’re still not fully at our goals, but we’re making progress.

We also try to make short-term goals and steps along the way. Progress carries us all forward. Overall, it’s about finding balance – and it’s never-ending.

Readers, how have you structured your portfolio to meet your respective investment needs? How do you find balance among your different goals and objectives? What considerations do you make when prioritizing a certain action?

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Post Disclaimer & Disclosure: As of this writing, we’re currently long the following: T; Fundrise – Balanced Investing Plan; VFICX; VWINX; VGIAX; VISVX; Acorns – Moderate Allocation; VGHAX; VFSVX; VGSLX; QCGRRX; and US Mid-Cap Index Fund. Note: We’re NOT currently long VEIRX as of this writing but intend to likely reallocate a portion of our portfolio back into this fund at some point in the future (potentially via our current VGIAX holdings).

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Related:

Qapital 18-Month Update: (Non) Passive Income Review

5 Considerations on How to Deploy New Capital

How We Got To Averaging +$1,000 a Month In Passive Income

Conducting You Own Risk Control Self-Assessment (RCSA) – Part 1

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