One principle to learning that I've found to be true no matter what you are learning is that a lot more can be said when you show people what YOU do, instead of telling them what they SHOULD do. Though the post here is more targeted towards entrepreneurs, #1 and #5 illustrate a similar point.
In everyday life I talk about what's right, wrong, and what should work, but what I say and what I do are often two different things. Unfortunately, sometimes that means I have to eat my own words and wish I had taken my own advice.
In today's post I want to show you how I divide up my current investments, and what I hope to achieve with future investments. Though I don't think this strategy will work for everyone, it can serve as a springboard for some of your own ideas.
The advantage of reading this here is that it's not extremely complicated. It certainly doesn't sound fancy or like anything you'd read in any kind of investment publication. The disadvantage is of course that it was spawned from my brain, and thus, is subject to my personal bias, experiences, and logic.
Basic Portfolio Breakdown
Vanguard Account #1 – Roth IRA
- Investment Strategy: Pick low-cost index funds that follow a very broad market
- Current Investment: S&P 500 Index Fund, S&P Dividend Growth Fund
- Future Investment Targets: More of current funds + Precious Metals/Miners Fund
- Target % of Portfolio: To be determined by IRA contribution restrictions
- Current % of Portfolio: 17%
Vanguard Account #2 – US and Foreign Markets
- Investment Strategy: 50% US Markets, 50% foreign markets. Start with Total US and Total World Market Funds. Expand to more niche related funds including small cap and mid cap funds, as well as European, Asian, and emerging markets funds.
- Current Investment: Total US market fund, Total World stocks fund, European fund, emerging markets fund
- Future Investment: Pacific rim fund, small cap fund, mid cap fund
- Target % of Portfolio: 30%
- Current % of Portfolio: 22.6%
Vanguard Account #3 – Dividend Income Portfolio
- Investment Strategy: Invest in dividend paying stocks above 4% (5% is ideal) that have consistently raised dividends for 10 or more years (the longer, the better)
- Current Investment: MO, DBD, LMT, COP, ED
- Future Investment: Add more of current holdings if price drops 5%, choose others if no price drop and cash becomes available.
- Target % of Portfolio: 30%
- Current % of Portfolio: 22.5%
TradeKing Account – Speculation
- Investment Strategy: Fun account for picking ‘winners', or companies I just like. Due diligence is needed, but this is the account where I allow myself to be more of a ‘trader' and less of an ‘investor', and use a bit of gut feeling.
- Current Investment: AAPL, F, CCGI, BKE, TSLA, LNVGY
- Future Investment: Currently watching GLW, GOOG, for opportunities.
- Target % of Portfolio: 20%
- Current % of Portfolio: 32.3%
So you can see here that I've overshot a little bit with my ‘play money' portfolio because I broke the #1 rule for beginner investors – don't invest emotionally.
I'm not that worried though, because I do have quite a bit of time to put more money into my more conservative funds, and I've really chilled out on my fun stock buying lately. You can see that I have AAPL in my portfolio, which I bought at about $500, and has since put a damper on my money, losing about 15% after I bought it.
As as I said in yesterday's post, the best way to not stress about making bad investment decisions is to use money that you don't need. I know this isn't an option for everyone, and lots of people are living paycheck to paycheck. Unfortunately, I don't have any good advice for you right now except that you need to create a serious budget (if you haven't started already).
But this rule of investing money that I don't need for at least a few years has been vital to me keeping my cool when I lose money. Honestly, losing money on a stock isn't a big deal because I invest in companies I believe in. A lower price just means I can buy more on discount! I buy stocks for long-term growth
What are you investment strategies and are you meeting your investment goals? Be social, and let us know below!