Personal Investing

My family asked me about my personal investing. I’ve done well in the market – I’ve averages over 8% returns per year for the past 11 years (2007-2017) which includes several down or flat years.

  1. It’s all in mutual funds in Vanguard
  2. I re-balance my funds about once a year unless there is a major world event in which case I’ll immediately re-configure my investments (think war, economic collapse of a country/region, etc.)
  3. I’m invested 80% in equities and 20% in bonds. The bonds are a hedge against the stocks. You can be more aggressive by having more equities or by having more aggressive equities (emerging/international markets and/or small cap).
  4. My specific investments and percentages
    1. VFIAX    Vanguard 500 Index Fund Admiral Shares – 40%
    2. VEMAX  Vanguard Emerging Markets Stock Index Fund Admiral Shares – 15%
    3. VWETX  Vanguard Long-Term Investment Grade Fund Admiral Shares – 20%
    4. VSGAX   Vanguard Small-Cap Growth Index Fund Admiral Shares – 25%
  5. This means that my portfolio is a good mix of aggressive and conservative, US and international. This is a secret to investing – diversification! That can’t be stressed enough – don’t put all your eggs in one stock or even one mutual fund. Here’s my mix:
    1. 40% invested in large US companies (stable growth)
    2. 15% invested in international companies (stable with some speculation)
    3. 20% invested in bond (conservative part of my portfolio)
    4. 25% invested in small cap or aggressive companies

A few rules for investing

  1. “A rising tide lifts all boats.” When the market is going up, you don’t have to be particularly smart or good to do well.
  2. “Be a pig, not a hog. Pigs get fat, hogs get slaughtered.” Go for gains of all kinds but don’t get greedy and chase after the high flyers each week or even each month.
  3. “Never fall in love with your investments.” They don’t love you back. Investments are tools, nothing more. Be willing to bail on them whenever necessary.

Lead On!