A follow up to my post –  Commodities

So this is a requested post I received via email. The original post is here where I talked about commodities etc. As with any finance advice I give on this blog these are my opinions, I am not a financial advisor. The person emailing me acknowledged this and the spirit of the email was more along the lines of “Well what are you doing then?” for a portfolio.

I told the person I would use my email reply and post it here as well so others can see. I am not going to list the specific funds I use, again this isn’t a financial advisors blog. I am a finance professional yes but I am not a certified financial planner so keep that in mind.

First, I am 52 years old. I have been investing since 1992. The majority of my assets reside in my 401K that I have rolled over from successive companies over the years. I am also debt free. Now this is important because while I invested for years, most of those years was at a lower than normal investment rate as I took that money and used it to pay off my mortgage. Approx. 35% of my net worth is the equity of my house. 50% is in retirement accounts, 10% is in a brokerage account that is designed to produce dividends the balance is cash.

So how does this break out exactly?

  1. I have 6 months of my current monthly expenses sitting in a money market account that gets .5% interest. This is an emergency fund.
  • 70% of my retirement accounts I use the “bogle” strat. I use index funds with low fee’s and loads. All of these are long term investments and have provided me with stellar returns. The fund names aren’t critical as long as they track correctly to the index:
    • 75% into an S&P Index fund
    • 20% International
    • 5% bonds

All of the funds in item 2 are investments I have held for several years in some mutual fund for or another.

  • 20% of my retirement is in 2 aggressive growth mutual funds. These focus on small cap funds and I monitor this grouping very closely. I “flip” this 20% often when I make good returns and then shop for new funds in this category.
  • 10% of my retirement is in a precious metals and commodities mutual fund. I have had the same one for years now it’s OK. This is a hedge really but I wanted to be in different parts of the market so I got one fund that invests in several commodities.
  • Brokerage account: this is all about passive income. I invest in singular stocks and mutual funds that have a long term track record of paying dividends. I keep reinvesting the dividends into more shares. The goal here is to build a big enough foot print to provide a good quarterly payout that I will use to supplement my income in retirement. I have many investments here which cumulatively add up to a good chunk of change. However singularly aren’t much.
  • Cash: I have another 3-6 months of expenses sitting in a debit/eft/checking account. This is what I call my “living” account. I want a coffee it comes out of here, gas, groceries. This is where my salary is deposited every month and I disperse from here to my other accounts.

So this isn’t very complex. Most of my wealth is tied into index funds and the equity of my house. The house equity of course isn’t liquid I am sitting on it but having bought the home decades ago the appreciation of the house has made it worth a nice chunk of change and paying it off early meant I saved on interest payments.

As I age this break out will change. When I am 62 I plan to collect Social Security and stop working for a salary. Ideally I will continue to work for health benefits, we’ll see. At that time, I will be shifting the break out and consolidating many of the asset classes into more capital preservation friendly vehicles that generate interest income. Ideally CD rates will be higher, and if they are I will look into them.

CD’s will never outperform the market but the extremely low risk is very attractive as I start to get into my 70’s and enact my legacy planning (for kids and grandkids). Keeping in mind the whole time I will still be living and spending and generating some income.

Anyway, as requested that’s where I am at on my investment portfolio. Thanks for coming by and supporting my blog I really appreciate it.