My Portfolio Allocation: Recent Changes and Reasoning
Why 68% is in Index Funds and Other Investment Choices Explained
I recently made some adjustments to my stock portfolio. As always, I want to be transparent with you about how I am investing…
My Current Portfolio Allocation
The pie chart (below) represents both my brokerage and retirement accounts.
Index Funds - 68%
As of today, 68% of my portfolio consists of low-cost index funds, specifically Vanguard’s VOO and VTSAX.
The percentage of my total portfolio that is in low-cost index funds has been growing over the years. My aim is 70%.
Over a 30 year period, the average equity investor underperforms the S&P 500 by ~3% points. I concentrate in low-cost index funds to hedge against this.
Individual Stocks - 30%
Nearly 100% of my individual stock exposure come from four businesses.
Apple (AAPL) — 11%
First Purchased: December 23, 2014 (+506%)
Berkshire Hathaway (BRK-B) — 10%
First Purchased: July 28, 2020 (+82%)
Alibaba (BABA) — 4%
First Purchased: January 31, 2021 (-29%)
Costco (COST) — 4%
First Purchased: August 24, 2020 (+65%)
Other Individual Stocks — <1%
If you would like to know more about any of the aforementioned stocks, and why I own them, then become a paying subscriber.
Cash - 2%
The cash is strictly referring to cash available to trade.
Separate of my investment portfolio, I keep 6-months worth of living expenses in an emergency (high-yield) savings account.
Recent Portfolio Activity
Charlie Munger taught me that there are huge mathematical advantages to doing nothing.
Sold Google for a profit. My thought-process is that I am already exposed to Google through VTSAX and VOO. Furthermore, owning individual stocks is not a wise bet for the long-term. Finally, I did not value the business.
Sold Sonos and PayPal. Realized losses that were the equivalent of <0.20% of the Stock Portfolio. Holding on to them any longer may have been Disposition Effect.
Overlooked Risk Factors
My concentration is Apple is technically greater than 11% when you consider that it is the largest weighted holding in both VOO and VTSAX.
e.g. Apple is 7.67% of Vanguard’s VOO
Alibaba’s home country brings risk. I plan to hold until 2030.
Some would argue that my portfolio could benefit from more international exposure.
Next Steps
I have a cash position that equals 2% of the Stock Portfolio.
The most rational decision is to fund the passive indexing strategy i.e. buy more VOO.
However, it would be fun to keep that cash in case I uncover a reasonably-priced, compounding machine.
Other investments Not Mentioned Here
I own real estate. I also investing in Venture-Backed Startups.
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