Can anyone weigh in on the is portfolio / asset allocation strategy? Background - TC: 180, - 40 years to retirement, in 20's. - risk-seeking, - buy-and-hold strategy, - knowledgable enough to avoid basic mistakes (e.g. selling in a down-market, picking stocks vs. index funds). Portfolio ($200K) - 45% in US Technology stock index fund - (VGT) - 40% in US Stock Market - (VTI, VTSAX) - 7% in US Real Estate - (VNQ) - 5% in International Stocks - (VTIAX) - 2% in Crypto - (BTC, ETH) - 1% in bonds - (BND) ---- EDIT Dec 2nd ---- Thanks for the advice. I've rebalanced to: - 40% in Tech index - 40% in US Stock Market - 15% in International - 3% in Real Estate - 2% in Bonds I plan to move to: - 60% in US Stock Market - 20% in US Tech index - 15% in International Stocks - 3% in US Real Estate. - 2% in bonds
Not diversified enough. You might’ve had outsized gains with that 45% US Tech, but sectors come and go. Total market is forever. You want risk but you’re taking dumb risk by having half of your portfolio in one sector. You have 40 years to retirement. You don’t need to beat average market return. And you probably won’t even if you try.
Why even bother with 1% bonds? What's the point?
Thanks — I viewed it as a first-step (and reminder) to increase the percentage as I age.
Talk to an advisor. I have a lot more bonds and cash
Sell the technology fund. You also need more international stocks and perhaps a bit more in bonds depending on your risk tolerance. Your portfolio is extremely suboptimal.
Go 98% crypto instead.
Too risky. Unless you are the insider crypto cartel who sets the price.
That’s not really how crypto works.
80% stock index 20% bond index
Best advice in 2019 and 2020: sell stocks, buy gold / silver. Major market correction / recession is pending and may hit hard the unprepared. You can easily tell everything now in the stock market is overpriced. There has been a global gold shortage since the end of 2018 and a global silver shortage for many years. Global silver supply will be depleted by 2025. Government precious metal mints (especially the US mint) are becoming dysfunctional as they can't deliver enough gold and silver coins to meet investor demand, and they now have to charge 10% premium. Central banks around the world are buying gold like crazy, it's now adjusted to be the highest grade of investment class. Institutional investors around the world are concerned about a coming recession and looking for safe heaven investment (reads: gold). You can easily google search and confirm any of the above in a few hours. You know what to do. Be aware though, don't buy those precious metal derivatives like ETF. They are paper assets running on fractional reserves, some are 0% backed holding no metal at all. If the issuers go insolvent as very likely in a meltdown, you lose all those paper assets. Best way to involve is the "good old way": buying investment grade, physical bullion-like coins, these have the best liquidity and lowest premium. Not bars, not jewelery, not rare collectible coins.
Hope you are right, I have a lot of GLD ETF
Damn, sell those fake ETF and convert them into physical bullions!
Thanks for the advice. I've rebalanced to: - 40% in Tech index - 40% in US Stock Market - 15% in International - 3% in Real Estate - 2% in Bonds I plan to move to: - 60% in US Stock Market - 20% in US Tech index - 15% in International Stocks - 3% in US Real Estate. - 2% in bonds
https://www.aarp.org/money/investing/info-2017/financial-advice-jack-bogle.html some wisdom from bogle, the guy who started etf craze and founded vanguard
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I’d do more on international and less in tech. ~30% in international That much tech gives you too much exposure to a single sector. It’s been a good few years recently but over the long horizon performs similar to general market. More in international to balance out the us economic booms and busts
Thanks, it's a good point. I looked at tech (VGT) returns since fund inception vs. market returns (VTI) since fund inception: It's 10% vs. 7%. Is it unreasonable to assume that—in another 15-year period— tech has a solid chance at outperforming the market, given it's greater volatility and risk? As for International stocks, how much diversification benefit do they add? I believe I saw a 0.8 correlation with US equities — and an even higher correlation when US equities are falling. As a higher point, if I have no plans to withdraw funds for 20+ years, is it reasonable to optimize for the highest return possible and take the risk and volatility as a given? Easy to say now, but volatility matters much less to me than long-run return.
Tech seems to have more volatility than the overall market. If you’re looking for higher returns for more risk, I think small cap companies in general would be a better bet than tech specific since that’s diversified across industries. $VB International also allows you to diversify political risk. If America starts sliding into political instability over the long term, you have some backup. International does have lower returns than US though.