What I Invest In

On Tuesday I had a comment from my friend at FiveCentNickel to my post titled The Best Stock to Put Away and Forget. He asked:

What's the balance between individual stocks and mutual funds in your portfolio? I know that you're a huge fan of Vanguard index funds, but you also seem to own a number of individual stocks, as well. Maybe this would be a good topic for a forthcoming post...

It is a good topic for a post! And since I've thought about doing this for some time, his question is just what it took to get me to do so. So here goes:

• My portfolio is located within several accounts -- retirement accounts (401k at work, past 401ks that have been rolled over into IRAs, SEP IRA) and taxable accounts (with Vanguard, E*Trade, and Ameritrade.) In addition to these, I have investments in real estate through an LLC and, of course, in my own home.

• From these funds, I try to make my overall portfolio hit the asset allocation I want, so any one account is not the proper asset allocation -- but they are in total.

• Currently, I'm about 90% in stocks and 10% in bonds. I have a long-term investment time horizon (20+ years) and am a rather aggressive investor anyway, so this split makes sense. I am NOT recommending it for you. (you have to decide on that yourself)

• There are three pots I put my money into -- index funds, mutual funds, and individual stocks. Roughly, the split breaks down as follows: index funds (65%), non-index mutual funds (20%), and individual stocks (15%).

• Index funds are the staple of my investing strategy and are growing as a percentage of the total since I dollar-cost average into them every 30 days. For why I invest so much in them, see Why I Like Index Funds (Updated).

• I use non-index mutual funds to 1) add more international exposure to my portfolio 2) invest in bonds 3) give me a bit more growth/value stocks than my index funds do and 4) take part in a few investment strategies I find interesting/potentially fruitful. I'm aware that international funds, bonds, and growth/value stocks can be purchased through index funds too, and I'm actually moving more of this money into them. I'm just spacing it out a bit since many of these funds are older and have grown quite a bit -- so selling them gives me a big capital gains hit.

• As for individual stocks I own and why, that's for another post (or series of posts). But to see some of them, check out Update on My Three CEOs and The Best Stock to Put Away and Forget. And, for my overall thoughts on investing, check out Best of Free Money Finance: Investment Posts.

Comments

[Lazy Man and Money]

Argh, you are killing me. ;-).

I read the question and then the whole thing and at the end you basically say that you'll answer it later.

At least you linked to some other posts so I can get an idea.

[IndexFan]

Hi,
I am a regular reader of your blog. Would you mind posting your actual asset allocation i.e the percentage by asset class and the fund that you use for that asset class?

thanks!

IndexFan

[Dave]

Hey, would you mind posting exactly what your portfolio is? The combination of your articles and actually viewing what you own could really help make a strong connection as to what and why.

Thanks!

[Norman Andrews]

Hi, FMF-guy, sorry to post this in wrong area, but couldn't find link
in your email.

Hope this wins me the fee 2008 Quicken:

We moved from Plainsboro, NJ to AZ in July of 2003. We got a (40 ft???) container,
basically a railroad car, dropped in front of our house, filled it with furniture,
9,000 books, a piano, disassembled bookcases, tools, a 1994 Cutlass Sierra, beds,
mattresses, etc. They had to fill the inside of the container, put stuff over and under
the car, and barely managed to close the container doors. (I didn't have to lift
a finger, except to do all my own packing beforehand, and to get a tow truck to
load the car into the container.)
After the container was full, a truck arrived and the driver took the container to a
railroad facility in northern NJ (Elizabeth??, Union??). From there it went by rail to Los Angeles, and was then trucked back to Phoenix, AZ area, and unloaded at my new house.

The cost to me, excluding getting a tow truck to load/unload the car, was $3500.00.
If I remember correctly, the guy in NJ who arranged the container shipping for me was
Frank Ho, a real estate agent. And that real estate connection was the key. He said he'd
give us a break on the shipping if we let him have the real estate sale. He sold our house
for us in 3 days.

I'm sure Mr. Ho didn't lose money on the deal. Perhaps we should have negotiated down the
R.E. commission instead. But I had gotten extremely high quotes on moving costs due to
the weight of the books, car, piano, etc. So using the container method seemed great.
It took a week or so for the goods to arrive in AZ.