Portfolio Repair

Many people would love to be in Jeremy McMullen’s shoes. At 30, he has little debt, and owns a home and a rental property. Yet, he’s in no mood for pats on the back. With an underperforming portfolio that lacks diversification, his holdings have produced a lackluster -0.1% five-year return. As a result, he’s desperately seeking better performance from his investments.

“For at least the last five years, my investments have lost money or been stagnant–even before the economic downturn,” says McMullen of his thrift savings plan, Roth IRA, and the mutual funds in his brokerage account.

He was so discouraged during the Great Recession of 2008—09 that for several months he stopped contributing to his brokerage account. “I watched it go as low as $14,000 at one point, when it had been worth $28,000,” he says. “I wanted to pull out all my money to protect it from a complete loss.”

But McMullen, who spent several years in the Armed Forces, is not one for backing away from challenges. He knows discipline gets results, and socks away $400 a month into his Roth IRA and about 10% of his salary of approximately $75,000 into the retirement plan at work.

He’s counting on these investments to fund his dream of being able to retire by age 55. His other goals include having the financial wherewithal to travel abroad once a year, and save for the college education of his 1-year-old son.

McMullen, a lieutenant in the United States Navy, serves as a naval science instructor for the University of South Carolina’s Naval ROTC unit. Although he offers guidance to students, McMullen admits that he also needs direction, “so that I can improve the performance of my investments and get the kind of growth I’m looking for.”

For the most part, his finances are on track. He has $37,000 in a money market account (which also represents his emergency funds), $5,300 in checking, additional savings of $3,000, and $92,000 invested in equities. He’s not drowning in debt–his only obligations are $2,300 for furniture, his car loan of $23,000, and $111,000 for his two mortgages.

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