My Investment Portfolio: 2021

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This time last year I wrote about the surprisingly good market returns in 2019. Well, the market did it again, in the middle of a pandemic and a volatile election. Do we need any more proof that markets are unpredictable? Sometimes the surprises can even be good ones.

In 2020, the Dow Jones Industrial Average gained more than 9.6% including dividends. The S&P 500, bonds, and some other asset classes did even better.

My conservative and diversified retirement portfolio again returned double digits for the year. Every single one of my holdings, across asset classes, gained.

If you’re a seasoned investor, you know not to construct a retirement strategy based on back-to-back double-digit returns. We have been extremely fortunate to see such a scenario unfold, and it may not repeat anytime soon. 

For retirees living off assets, caution is always advised. I’ve been in a defensive posture for most of my investing life, holding a roughly 50/50 stock/bond asset allocation. Historically I’ve held a large stockpile of cash too — more than two years of living expenses. As you’ll see, that positioning was helpful to us last year.

When I wrote this post last January, my concern was that the good news was closer to ending than beginning.  I saw the world as greedy, in the longest-running bull market in history. We were financially independent. We’d already “won” the game. So I took money off the table. Why take on extra risk? 

Though I could not predict the pandemic in advance, once I started reading the reports from China, I knew a black swan event was about to unfold. And it did. Now, thanks to government stimulus and human ingenuity, the market has recovered. There are reasons to believe, with vaccines on the horizon, that more good economic news may lie ahead. But only time will tell.

Meanwhile, read on for my annual portfolio performance report….

Current Holdings

My core portfolio holdings have not changed since last year. The allocations are somewhat different, due to a big decision discussed below. But it’s still a familiar picture of low-cost Vanguard funds:

FundSymbol(s)Expense Ratio% of Portfolio2020 Return
Vanguard Wellesley IncomeVWINX/VWIAX0.23%/0.16%33.1%8.54%
Vanguard LifeStrategy Moderate GrowthVSMGX0.13%6.1%13.59%
Vanguard FTSE Social Index FundVFTAX0.14%20.5%22.67%
Vanguard Intermediate-Term TreasuryVFITX/VFIUX0.20%/0.10%12.9%8.32%
Vanguard Total International Stock IndexVTIAX/VXUS0.11%/0.08%12.0%11.28%
Vanguard Inflation-Protected SecuritiesVIPSX/VAIPX0.20%/0.10%7.1%10.96%
SPDR Gold SharesGLD0.40%1.4%23.68%
digital currencies5.3%350.7%

(Note: Multiple symbols are for Admiral/ETF shares. Portfolio percentages are as of 12/31/2020. Annual returns are for my shares -- generally the less-expensive Admiral or ETF shares. Overall return is not necessarily a weighted average of individual returns, because holdings changed during the year.)

Overall, my portfolio is currently allocated 49% in stocks, 41% in bonds, 7% in gold and digital currencies, and 3% in cash, taking into account the actual reported cash holdings in all of my funds. (Note, the cash return stated in the table above is approximate. I don’t have a simple way to average my different cash accounts.)

Of the stocks, 28% is international. (Taking into account the actual reported international holdings in all of my funds, not just in those funds labeled “International.”) I continue liking a relatively large allocation to international as a diversification away from the U.S.’s potential long-term economic woes, including debt.

Purchases and Sales

In March, as we watched the market swoon from pandemic news, I made a small purchase of equities — Vanguard Total International Stock Index (VTIAX) — with my annual IRA contribution. 

Then I also moved a few percent of my net worth from Vanguard Intermediate-Term Treasury Fund (VFIUX) to Vanguard FTSE Social Index Fund (VFTAX). Thus, I was doing some minor rebalancing, moving more cash and bonds into depressed stocks.

Then, in July, as the market recovered, I moved back in the other direction, from VFTAX (social stocks) to VFIUX (Treasury bonds). I made another move of about 1% in the same direction in August.

This wasn’t full-scale rebalancing back to my target asset allocation. But it was a nod of a few percent in that direction, something I’ve often done during market crises. When I know my allocation is drifting off target due to extreme events, making a small move is a way to address some risk, without inadvertently overreacting.

Alternative Investments

My tiny Bitcoin and digital currency position soared embarrassingly skyward again, juicing my overall return. (As a reminder of the volatility and risk though, remember that digital currencies had a disastrous 2018, losing more than 50%.)

Only the most seasoned investors, who can also afford to lose it all, should even consider digital currencies. I’m a software engineer, with some feel for the underlying blockchain technology. And I invested only a tiny fraction of my net worth back in 2016/2017. I don’t think digital currencies have any role in the average retirement portfolio, so I won’t discuss them further here. If you want additional perspective, see my post on alternative investments.

Gold has had a long-term role in my investment portfolio. It’s both grown in value and been an effective diversifier for me. There are good arguments both for and against gold as an investment hedge. Experienced investors continue to debate the issue. Chris recently shared his own thoughts on investing in gold.


The big financial news for us this past year is that we bought a house. Long-time readers of this blog may find this ironic, since I’ve been an advocate of renting in retirement, or at least taking a hard look at the rent versus buy decision. My bottom line — controversial news to many — has been that home ownership is often overrated, from a financial point of view. But I always acknowledged that buying a home is also an emotional decision, and other factors could outweigh the financial ones. That finally became true for us.

Long story short, rents in our ideal retirement location continued to increase, while maintenance issues on our rental kept being deferred. Meanwhile a sea change was underway around us: The pandemic has forced many employers of white-collar workers to realize those employees could be just as effective, and a lot cheaper, working from home. Consequently, affluent workers and their families are bailing out of the big cities to smaller towns like ours. Our local paper reported 20% year-over-year growth in real estate prices here. Meanwhile, both Caroline and I have entered our 60’s and are more certain than ever that we want to stay put and age in place. I was concerned that if we delayed buying any longer, we might be priced out of the area.

So, a couple of months ago, facing a highly competitive market, we made a full-price offer on a home. On the day we saw it for the first time, there were five showings scheduled, and two offers already in place. What clinched the deal for us was the ability to close quickly, with cash. There simply wasn’t time to line up a mortgage, even if I’d been OK with going into debt again. Thus in one transaction we wiped out all of our emergency cash stockpile, and then some, for the worthy goal of securing a long-term home. It was one of the hardest financial and life decisions we’ve had to make in many years. 

In addition to using our cash, I liquidated some of our Vanguard LifeStrategy Moderate Growth (VSMGX), SPDR Gold Trust (GLD), and digital currency to buy the house. The tax impacts should be minimal: I was able to engineer most of the capital gains into the zero percent bracket due to our generally low income in retirement. Conveniently, the assets I sold resembled our remaining holdings, so our overall asset allocation didn’t change much. And we still have a sizable retirement portfolio with the well diversified holdings listed in the table above. 

In the long run, I may replenish our cash and GLD somewhat. But with a paid-off house in our portfolio now, it won’t be like the old days where I kept a huge cash cushion on hand. We no longer have the luxury or need for such a large cash stockpile. One purpose of that large cash position was always in case we had to buy a house quickly — which ultimately we did. Going forward, we will likely favor earnings from our diversified portfolio over the security, and performance drag, of cash.


Unlike in many recent years, Vanguard didn’t reduce expenses on any of my holdings this year. With most of their expense ratios already razor thin, perhaps Vanguard has run out of water it can squeeze from that stone.

As I reported last year, Vanguard has added low-cost Admiral shares (VFTAX) for their FTSE Social Index and other funds, with only a $3K minimum. The benefits of social investing can be debated, but I’m glad I’ve made the effort. The former investor-class shares for FTSE Social Index Fund (VFTSX) and Total International Stock Index (VGTSX) appear to be closed to new investors now.

Currently, more than 90% of our holdings are at Vanguard. Despite my affection for and trust in the company, that’s just too many eggs in one basket for my comfort level:

I’ve already had one experience this year of being denied access to investment accounts due to a security glitch. I don’t ever want to face being locked out of the majority of our holdings while a company fixes its systems.

So I will be diversifying management companies. One of my top projects in the new year is to transfer some of our Vanguard assets to Schwab, reinvesting them in similar, low-cost, Schwab ETFs.

Overall Returns

My overall investment return for 2020 was 17.7% (exactly the same as the previous year). It would have been about 13.5% without the digital currencies. That compares to 13.59% for the Vanguard LifeStrategy Moderate Growth Fund (VSMGX) — a possible benchmark for my balanced portfolio that holds about 60% stocks and 40% bonds. 

The geometric mean of my returns going back for the 16 years I’ve closely tracked them now is at 7.3%. That’s a respectable average for a conservative portfolio in these times, including the 2008-2009 Great Recession. You can live extremely well in retirement if you can count on a  7% long-term return, though you probably shouldn’t.

And how about you? How did your portfolio fare in 2020? 

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Note: Please understand that I am not a financial advisor and cannot give personal financial advice or discuss investments other than my own. My portfolio is just my portfolio. I’m not recommending it for anyone else. It’s a real-life portfolio that has been assembled and pruned over many years, much of it long before we all knew as much about investing and early retirement as we do now. This is not necessarily the portfolio I would design from scratch today. That said, over a decade of retirement, it has grown steadily and supported a comfortable lifestyle for us. 

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A Message From Chris

Financial coach, Geremy Chavez, has organized a virtual conference called Financial Freedom Conference 2021. 

Geremy has recruited 10 experts in their respective fields including doctors, coaches, speakers, and authors. Each will get you closer to achieving your goals for 2021. Topics include:

  • The Wealth Building Mindset
  • Goal Setting, Action Taking, and Finishing
  • Routines and Habits of the Wealthy
  • Real Estate Investing Strategies
  • Negotiation Strategies
  • Wealth Building Strategies

I’m excited to be a part of this line up.  I’ll be speaking about applying FIRE principles to build a better lifestyle.

This virtual conference, happening this Wednesday January 13th, will provide you with tools, methods, and strategies that are proven to move you towards your best 2021. Best of all it is FREE.  You’ll be able to watch the live virtual conference from the comfort of your home or office. Click here to learn more and register.

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* * *

[The founder of, Darrow Kirkpatrick relied on a modest lifestyle, high savings rate, and simple passive index investing to retire at age 50 from a career as a civil and software engineer. He has been quoted or published in The Wall Street Journal, MarketWatch, Kiplinger, The Huffington Post, Consumer Reports, and Money Magazine among others. His books include Retiring Sooner: How to Accelerate Your Financial Independence and Can I Retire Yet? How to Make the Biggest Financial Decision of the Rest of Your Life.]

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  1. 17% is solid! I’m more envious of the 20% real estate gains! Where do you guys live?

    I’m more bullish on real estate in 2021. It is my primary focus.

    I got lucky in 2020 with about 35% of my portfolio in big tech that gained a lot due to the pandemic. I don’t expect this to continue.

    1. Darrow is in Santa Fe, NM. I live in Ogden, UT where we’re seeing a similar market. That seems to be pretty representative of many areas in the mountain west.


  2. You suggest that you may diversify somewhat out of Vanguard…what do you think of Fidelity as opposed to Schwab? I also have been with Vanguard for YEARS and have also thought about going to Fidelity with a small portion of my portfolio which I recently did. I will be dollar cost averaging on a monthly basis which I do with Vanguard as well into a brokerige account.

  3. I’m thinking of Fidelity too. I also would be interested to know the reason Darrow picked Schwab. My reason for considering Fidelity is I already have an HSA account with them plus their cash mangement accounts are always rated very well.

    1. Mark & Ricardo,

      Not sure if Darrow is going to be answering comments, so I’ll chime in here. Vanguard is unique in that they their mutual funds are client owned, so they’re more aligned with investor interests. They also led the fee wars that have seen all companies lower investing fees which have been a huge win for all investors.

      Re: Schwab vs. Fidelity, both now offer funds with fees even lower than Vanguard. It’s just important to know they also have many more high fee offerings as they offer the low cost index funds as loss leaders to draw investors in where they can be up sold. Either place would be a fine choice to diversify holdings, or even use as a primary brokerage to hold your funds as long as you understand their offerings and their motives.


  4. Chris, I took advantage of the heavy market downturn in the Mar/Apr timeframe to get very active in the options market. I am comfortable doing only two types of options, selling covered calls or selling put options on individual stocks, and lucked into an almost perfect scenario. Even with the baggage of some funds in bonds and more cash on the books than I wanted, the tremendous move back upwards in the markets allowed our overall return for 2020 to be just over 40%. I am not a genius by any means, and sometimes it is better to be lucky than smart. I think 2020 was a big bit of the former, and a little bit of the latter. Best wishes.

    1. ChuckY,

      We generally advocate for a buy and hold approach to investing. Options are a legitimate way to help control risk and/or enhance returns, but it is a skill set that I don’t possess and don’t care to learn. I’ve chosen to just earn some income in ways that are more interesting to me and keeping my paper (stock/bond) investments as passive as possible.

      Best to you as well,

  5. Thank you for sharing Darrow, great stuff and yes I was surprised that you bought a house but your reasoning was very sound. Hey Chris, are you going to post your portfolio/asset allocation for 2021 or did I miss it? Thank you Darrow and Chris for your efforts as I enjoy reading the blog.

  6. Thanks for another well written and thought provoking portfolio update, Darrow! Your detailed updates have helped us view our own decisions in a different light. To answer your question on performance our conservative retiree portfolio returned 10.2% in 2020. Our mix was about 30% stock/25% bond/40% private equity/5% cash.

  7. Excellent work, Darrow…and thanks for sending out the update Chris. Darrow has long been a huge yet humble influencer in the FIRE “space”…a founding father in my eyes. As I eyeball 50 this summer…I think of him and his success in the pulling the trigger at his half century mark. Thank you both for your informative yet measured approach.

  8. Thanks Darrow for another great post, and congratulations on setting down roots in Santa Fe before you got priced out! I have friends who’ve been looking for a place there for over a year without success.

    We went the other direction with the brokerage diversification process: had 80%+ at Schwab but moved my IRA and a goodly chunk of joint account assets to Vanguard because Admiral shares of Wellesley are only available within Vanguard and the difference in ER adds up over time.

    I hear good things about Fidelity customer service but can only speak from lengthy experience about Schwab. Schwab Bank is fantastic, reimbursing ATM fees for their debit card worldwide (that alone has saved us a few thousand dollars over the years since we used to travel extensively internationally), Schwab ETFs are more than competitive with Vanguard’s and their customer service and website are lightyears beyond Vanguard’s.

    The other reason I think that having a decent chunk of assets at either Schwab or Fido makes all kinds of sense (other than the very real issue of possible temporary loss of access to accounts due to cyberattacks) is that unlike Vanguard these brokerages have physical offices one can walk into (post-pandemic, anyway) and in many cases that’s an important peace-of-mind factor in the very common scenario where a surviving spouse doesn’t feel comfortable managing investments online and needs some in-person hand-holding.

    All the best to you in 2021!

  9. My portfolio is similar except I don’t own any Bitcoin or Gold. Happy to see you got great returns in those investment but I don’t plan to ever touch those asset classes myself (I’m happy with my lower returns). I’m also thinking of converting the rest of my Vanguard Admiral share positions in IRAs to index ETFs to shave an extra 0.2% in fees. The tough ones are the actively managed funds in taxable accounts I bought decades ago. Those with 150% – 300% in taxable gains are the more difficult ones to figure out whether a flip to lower cost ETFs is worth it.

    My personal experience is Fidelity is better than Vanguard in general. Lately, I’ve been transferring some positions in-kind to take advantage of promos and have now tried etrade, TDAmeritrade and Schwab as well as Fidelity and Vanguard. In my experience, from a service perspective, etrade sucks, Schwab seems decent and TDAmeritrade and Vangard are OK and Fidelity has been great for me. I only stay with Vanguard because of the low fee Admiral shares.

  10. I was able to squeeze out a little more expense from one of my Vanguard holdings. I sold my Life Strategy growth and invested in the underlying funds. The individual funds now are in Admiral funds v investor shares and I avoid the management fee for the all in fund.

  11. 24.8% return for 2020 (for reference 30% for 2019) which is just nuts as a 2 year run given everything thats happened. Granted I have a way more aggressive portfolio than you…80% stock/10 bonds, 10 cash/other. I go a bit more aggressive as my wife is a HS teacher and will have a pretty solid pension (knock on wood) to cover most of our expenses in retirement…so Im going a bit more aggressive in our allocations.

    Im interested in your topic on not having too much of your assets with one financial institution. Right now we’re split between 3 (Vanguard, Fidelity and Lincoln Financial, 40/40/20) I was going to consolidate to 2 after my wife retires this year…but am rethinking that idea.

  12. Interesting discussion about keeping funds at more than one company. My wife and I have retirement accounts at both Vanguard and Fidelity. We were going to consolidate them at Vanguard when we retired but didn’t, mainly out of inertia. I’m now glad we didn’t. As others have noted, Fidelity has a line-up of index funds that are competitive with those at Vanguard, and we’ve found that Fidelity’s customer service, website, and statements are as good as and, in some cases, better than Vanguard’s. I also second the poster who points out the advantage of Fidelity’s having physical locations. Shortly after we retired, I needed some advice and ended up talking to a Fidelity representative in person at one of the branch locations. He was extremely helpful, well-informed, and no-pressure (that is, he didn’t try to convince me to move our money from Vanguard to Fidelity). While I fully appreciate the advantages of Vanguard, I find it reassuring to have an account with another company, too, especially in the era of hiking and cybercrime.

  13. I recently retired at 60 years old with a portfolio of around 700k. I am super aggressive with 100% in U.S stocks. Because I have 0 debt and 5 years of liquid cash for living expenses I am willing to take that risk. At some point, I will move some of my money out of equities and put it into less volatile funds. When the market crashed in Feb I didn’t lose 1 minute of sleep. Also,…because I am single I don’t have to explain my investment style to anyone but myself. If need be I could live in S.S which I will take at 62 regardless.

  14. Curious if you adhered to the 4% rule when withdrawing money from your portfolio last year? Or did you depend entirely on the cash you set aside?

  15. Most of us had great returns this year. Unfortunately, we must thank the Fed, though while we have become marginally wealthy our oligarch overlords have more wealth than most nations’ GDP. History has shown… this will not end well.

  16. Great article. Thanks for sharing. One question/point–if you transfer some of your money out of Vanguard and into Schwab–into similar funds–that will be a taxable event, no? Is it worth it?

    1. You can do pretty much anything inside of a tax advantaged account, other than sell the funds to withdrawal the cash, and it is not a taxable event. You can transfer funds in-kind between companies (meaning you are not selling the funds, just holding them at a different brokerage) and that is also not a taxable event.

  17. Hi Chris, I hear a lot of people mention they like that Vanguard is client owned. However, at the end of the day, how exactly does that impact Vanguard clients from a financial perspective? Fidelity, for example, now has funds equal to or cheaper that vanguard’s equivalent funds.

    What am I missing?

    1. Danny,

      It probably doesn’t matter if you are an informed investor who is playing close attention to how you invest your money, what fees you’re being charged, etc.

      The key with Vanguard is the way it is structured. There is no incentive for them to maximize profits, b/c the profits would just be returned to the funds that themselves own Vanguard. All it would do is create a taxable event to the owners, who are ultimately the shareholders. It is either brilliant or somewhat convoluted and possibly even illegal structure, depending on your perspective, that ultimately is in the investor’s best interests. You can Google around and see that Vanguard was actually sued for this structure a few years ago, because some people believed it was a way of evading taxes and giving them an unfair advantage over (profit seeking) competitors.

      Every other company that I’m aware of (such as Fidelity, Schwab, etc.) are publicly or privately owned companies that are incentivized to maximize profits. Look back 10-15 years and none of them were close to Vanguard’s fees. You’re correct that they do offer some lower cost funds now, b/c VG pushed the whole industry that way b/c so many funds were flowing their way as people understood the impact of fees. They’re not offering these ultra-low fee funds b/c their hearts are in it. They’re serving them up as loss leaders to draw in customers who can later be convinced to switch up to more expensive fees, up sold advisory fees, or if none of these work the companies can start charging other account, record keeping, etc. fees.

      The bottom line is Vanguard is not incentivized to earn a profit and that is as low as they can go on fees. The other companies are incentivized to earn a profit and they are going lower. There has to be an end game there where they make more money elsewhere, so buyer beware.

      Hope that makes sense.


  18. I didn’t calculate it out but how can Darrow’s average expense ratio be 0.11% when only one of his funds are below that number?

    1. Matthew,

      You would have to calculate how much of the portfolio is held in a particular fund and then multiply that times the expense ratio. Then you add that up to get the weighted expense ratio.

      I think you’re just reading it wrong. Cash and crypto have no expense ratio (ie = 0%). Both bond indexes and the international stock index are under .11%.


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