My Investment Portfolio Playing Tricks On Me

I recently checked my investments for the first time in awhile. It was coming up on time to rebalance, so I figured I would take a look. Imagine my surprise when I opened it up and found my investment portfolio playing tricks on me!

This post is that story. What I did about it. And a few lessons learned along the way.

Buckle up!

First, an homage

The title of this post is a thinly veiled homage to one of my favorite songs of all time. It also was one of the first things the popped into my mind after what happened.

The song is Mind Playing Tricks on Me by Geto Boys off of their 1991 album. Many of your will remember Geto Boys for their song Damn It Feels Good to be a Gangster which was famously featured in the movie Office Space. However, Geto Boys, featuring a young Scarface, have a deep set list of incredible songs that were ahead of their time.

Mind Playing Tricks on Me is a particularly deep song painting a vivid picture of the mental anguish and exhaustion that the rappers feel and experience in their lives growing up in Houston.

I’m paranoid, sleeping with my finger on the trigger
My mother’s always stressing I ain’t living right
But I ain’t going out without a fight
See, everytime my eyes close
I start sweatin, and blood starts comin out my nose

Geto Boys, Mind Playing Tricks on Me

Obviously I am taking a lighthearted approach to this post in comparison. But it’s never a bad time to reflect on or learn about some good music.

Anyway…

My investment portfolio

From my written investment plan, you may remember that my asset allocation is:

• 40% US Stocks
• 35% International Stocks
• 5% REITs
• 10% US Bonds
• 10% TIPS (Inflation indexed bonds)

And from my in depth review of my 403b account with TIAA, you will remember that I invest in the following index funds to cover this asset allocation:

Stock Funds

• TIAA Access Vanguard 500 Index T1 (30%)
• (My small value tilt) TIAA Access Vanguard Small-Cap Value Index T1 (10%)
• TIAA Access International Equity Index Fund T1 (35%)

Bond Funds

• CREF Inflation-Linked Bond R3 (10%)
• TIAA Access Vanguard Total Bond Market Index T1 (10%)

Real Estate

• TIAA Real Estate REIT (5%)

How my invest portfolio played tricks on me

Ok, so I go to check my account with TIAA recently. I am investing in index funds for the long term to capture the overall returns of the stock market. So I don’t care about what happens to the market short term. It can go up, down, sideways. I’m ambivalent. Because I am investing for the long term.

All this just means that I don’t check my investment account regularly. So it had been awhile. And the only reason that I checked when I did was because we were closing in on another year and I was planning to rebalance.

As a reminder, rebalancing is the practice of bringing your investments back to your desired asset allocation every once in awhile – generally once a year. Rebalancing has been shown to increase overall returns. It also keeps your actual investment risk aligned with your risk tolerance. All good stuff.

Anyway, I go to check my investment portfolio, only to find mostly tricks and minimal treats (not many market gains currently…).

I found that I was all of a sudden investing in two new funds:

• TIAA Access Vanguard Treasury Money Market Investor T1
• TIAA Access Vanguard Extended Market Index T1

Did my asset allocation call for investing in a money market fund? Nope!

And did I elect to start investing in this Extended Market fund or even know what it was? Nope!

Needless to say, I was pretty confused.

So what had happened was…

Basically, the deal was that TIAA at some point in the very recent past, TIAA stopped offering the following two funds which were included in my selections:

• CREF Inflation-Linked Bond R3 (10%)
• TIAA Access Vanguard Small-Cap Value Index T1 (10%)

Just like that. Poof.

All of a sudden, my inflation indexed bond and my small value tilt allocations were gone. And not only that, but TIAA had tried to pick the next best things for me and I found myself invested in two unknown funds.

Not the best situation.

And did TIAA tell me about the impending closure of access to my initial fund selections?

I have no idea.

Honestly.

Certainly no messages that popped up in my investor portal. I get random mailings from them. Most are promotional. I don’t pretend to go through all of them.

So maybe they did tell me in one of those. But certainly not as clearly as I would have hoped.

What did I do about these investment portfolio tricks?

Step 1 was to learn about the new funds I now found myself invested in. Then Step 2 would be to re-allocate this money into funds that actually fit my planned asset allocation.

The money market fund

The money market fund was pretty straightforward. I knew I didn’t want to be invested in it. A money market fund is an awesome place to keep your emergency fund. But these were my investments. And I don’t want to be on the sideline. Especially in a down market when stocks and bonds are on sale!

In their wisdom, TIAA had allocated any deposits I had earmarked for the now inaccessible inflation indexed bond fund into this money market account. So I looked for another similar account to re-allocate into.

No inflation indexed bond accounts were available. So I just dumped this money and all new deposits into the total bond market fund. My previous holdings in the inflation indexed bond fund still would stay and grow, so its presence from my allocation did not disappear completely.

The extended market index fund

This one was a bit trickier. Now that the small value index fund was no longer an option, TIAA placed my recent deposits into the TIAA Access Vanguard Extended Market Index.

This fund is a mid to small cap blend fund with an expense ratio of 0.14%. Not an ideal substitution for the small value fund. However, I do like the idea of keeping a small and/or value fund for long term growth.

So I looked for a replacement. Unfortunately, only one other small value fund existed. But this was actively managed with a massive expense ratio. No way I was going into that.

After searching around, I decided to keep future investments going into this extended market fund to keep a small tilt rather than transition future investments only into the S&P 500 institutional access index fund.

And again, my previous holdings in the small value index fund still would stay and grow. I just couldn’t add to it anymore.

The end result

My new active 403b holdings were now:

Stock Funds

• TIAA Access Vanguard 500 Index T1
• TIAA Access Vanguard Extended Market Index T1
• TIAA Access International Equity Index Fund T1

Bond Funds

• TIAA Access Vanguard Total Bond Market Index T1

Real Estate

• TIAA Real Estate REIT

And the tax implications from these investment portfolio tricks were…

Thankfully nil.

Remember, all this happened inside my 403b account, which is a tax deferred account. I could buy, sell, switch, transfer, and adjust to my pleasure without incurring massive capital gain taxes.

But really, this sort of thing would never happened in a. taxable account since you can invest in pretty much whatever low cost broadly diversified index funds you want inside of any good brokerage worth its salt.

The final word

Here are my big takeaways:

• Don’t trust your retirement brokerages
• Check your investment portfolio every once in awhile
• But don’t get obsessed and check all the time
• Just enough to rebalance and make sure there are no tricks being played

And if you haven’t started investing yet, learn why investing in index funds is the way to go, develop your individualized asset allocation, and create a written investment plan using mine as a template!

What do you think? Have you ever been tricked by your investments? What happened? Do you rebalance? How often? Let me know in the comments below!