Jill on Money: Debt Ceiling Portfolio, ETFs, Credit

Last Updated Jul 18, 2011 6:04 AM EDT


Jill on Money" listeners are a smart bunch. As politicians dither over the debt ceiling, Bob in CT and e-mailers Albert, Andy and Tom all wondered what moves they should make to protect their investments without being stuck with the paltry interest of a money market account. This portfolio is also appropriate for those worried about the market disruption that would ensue if no debt ceiling deal is reached.

If you have additional suggestions, please send them along. These are for general purposes only -- please make sure to consult a qualified professional if you need assistance in determining the proper asset allocation for you! I have also provided a bunch of links...

Bob and Jill's Wimpy Portfolio

Rick in Indiana called in to find a place to invest about 10-15K of extra cash each quarter. He and his wife have about $1.4 million spread out over our retirement accounts and want to start building a taxable Exchange-Traded Fund portfolio. ETFs have two main advantages over index funds: expenses are often slightly lower and they are more tax efficient. BUT, ETFs don't make sense if you use a periodic investing plan such as dollar-cost averaging with small amounts. So, I present Rick's ETF portfolio more as a way for anyone to use ETF's, because he may be better off using the mutual fund portfolio above.

Listener Chris from Colorado reminds me that Schwab charges NO COMMISSION, if you use Schwab ETF's, noting that "Schwab is expanding their line up and the expenses are competitive." Fidelity and Vanguard also offer commission-free trading on certain ETFs.

Here's a quick ETF-primer:

Rick's First ETF Portfolio

  • 60% Vanguard Total Stock Market ETF (VTI)
  • 30% Vanguard FTSE All-World Ex-U.S. ETF (VEU)
  • 10% Vanguard Total Bond Market ETF (BND)
Rick's Second ETF Portfolio (Use with portfolio of >$500K)
  • 10% Vanguard Total Stock Market ETF (VTI)
  • 10% Vanguard Small-Cap ETF (VB)
  • 10% Vanguard Dividend Appreciation ETF (VIG)
  • 15% Vanguard FTSE All-World Ex-U.S. ETF (VEU)
  • 5% Vanguard Emerging Mkts ETF (VWO)
  • 30% Vanguard Total Bond Market ETF (BND)
  • 10% SPDR DB International Government Inflation Protected Bond ETF (WIP)
  • 5% Wisdom Tree Dreyfus Commodity Currency (CCX)
  • 5% Gold (IAU OR GLD)
In non-portfolio questions, we heard from Dennis in WA, whose parents were recently moved into a retirement home, leaving behind an empty house. Should they sell it or rent it?

We also had a couple of questions about establishing credit--another reminder that simply not using credit can be a thorny issue when you need to buy a home or a car.

Here are web sites and resources mentioned in this week's show:

Thanks to everyone who participated and to Mark, the BEST producer in the world, whose 401 (k) contribution level is matched by his great musical taste! If you have a financial question, there are lots of ways to contact us:
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    Jill Schlesinger, CFP®, is the Emmy-nominated, Business Analyst for CBS News. She covers the economy, markets, investing and anything else with a dollar sign on TV, radio (including her nationally syndicated radio show), the web and her blog, "Jill on Money." Prior to her second career at CBS, Jill spent 14 years as the co-owner and Chief Investment Officer for an independent investment advisory firm. She began her career as a self-employed options trader on the Commodities Exchange of New York, following her graduation from Brown University.