Here’s my quarterly update on my current investment holdings as of 7/8/22, including our 401k/403b/IRAs and taxable brokerage accounts but excluding real estate and side portfolio of self-directed investments. Following the concept of skin in the game, the following is not a recommendation, but just to share an real, imperfect, low-cost, diversified DIY portfolio. The goal of this “Humble Portfolio” is to create sustainable income that keeps up with inflation to cover our household expenses.
TL;DR changes: Went from 67/33 stocks/bonds ratio to 64/36, so buying more US and International Stocks with available cashflow.
How I Track My Portfolio
I’m often asked how I track my portfolio across multiple brokers and account types. (Morningstar also recently discontinued free access to their portfolio tracker.) I use both Personal Capital and a custom Google Spreadsheet to track my investment holdings:
- The Personal Capital financial tracking app (free, my review) automatically logs into my different accounts, adds up my various balances, tracks my performance, and calculates my overall asset allocation daily.
- Once a quarter, I also update my manual Google Spreadsheet (free, instructions) because it helps me calculate how much I need in each asset class to rebalance back towards my target asset allocation. I also create a new tab each quarter, so I have snapshot of my holdings dating back many years.
July 2022 Asset Allocation and YTD Performance
Here are updated performance and asset allocation charts, per the “Allocation” and “Holdings” tabs of my Personal Capital account.
Target Asset Allocation. I call this my “Humble Portfolio” because it accepts the repeated findings that individuals cannot reliably time the market, and that persistence in above-average stock-picking and/or sector-picking is exceedingly rare. Costs matter and nearly everyone who sells outperformance, for some reason keeps charging even if they provide zero outperformance! By paying minimal costs including management fees and tax drag, you can actually guarantee yourself above-average net performance over time.
I own broad, low-cost exposure to productive assets that will provide long-term returns above inflation, distribute income via dividends and interest, and finally offer some historical tendencies to balance each other out. I have faith in the long-term benefit of owning publicly-traded US and international shares of businesses, as well as the stability of high-quality US Treasury and municipal debt. My stock holdings roughly follow the total world market cap breakdown at roughly 60% US and 40% ex-US. I add some “spice” to the vanilla funds with the inclusion of “small value” ETFs for US, Developed International, and Emerging Markets stocks as well as additional real estate exposure through US REITs.
I strongly believe in the importance of knowing WHY you own something. Every asset class will eventually have a low period, and you must have strong faith during these periods to truly make your money. You have to keep owning and buying more stocks through the stock market crashes. You have to maintain and even buy more rental properties during a housing crunch, etc. A good sign is that if prices drop, you’ll want to buy more of that asset instead of less. I don’t have strong faith in the long-term results of commodities, gold, or bitcoin – so I don’t own them.
I do not spend a lot of time backtesting various model portfolios, as I don’t think picking through the details of the recent past will necessarily create superior future returns. Usually, whatever model portfolio is popular in the moment just happens to hold the asset class that has been the hottest recently as well.
Find productive assets that you believe in and understand, and just keep buying them through the ups and downs. Mine may be different than yours.
I have settled into a long-term target ratio of roughly 70% stocks and 30% bonds (or 2:1 ratio) within our investment strategy of buy, hold, and occasionally rebalance. This is more conservative than most people my age, but I am settling into a more “perpetual income portfolio” as opposed to the more common “build up a big stash and hope it lasts until I die” portfolio. My target withdrawal rate is 3% or less. Here is a round-number breakdown of my target portfolio.
- 30% US Total Market
- 5% US Small-Cap Value
- 20% International Total Market
- 5% International Small-Cap Value
- 10% US Real Estate (REIT)
- 20% High-Quality bonds, Municipal, US Treasury or FDIC-insured deposits
- 10% US Treasury Inflation-Protected Bonds (or I Savings Bonds)
Commentary. According to Personal Capital, my portfolio down about 16% for 2022 YTD. My US and International stocks have dropped enough that all new cashflow is being placed into buying more of those asset classes. Simple as that. Keep on truckin’.
Since that was so short and boring, here a quick fact that I keep in my head. Using the “Rule of 72”, we know that if your portfolio return 7% a year, it will double roughly every 10 years. $10,000 invested for 10 years will turn into $20,000. However, $10,000 invested for 20 years will turn into $40,000. $10,000 invested for 30 years will turn into $80,000. That provides me a rough sense of the power of compounding and how it starts slow but kicks into turbo mode later on. I’ve been investing for about 20 years, so I’m getting to the good part! 😉
I’ll share about more about the income aspect in a separate post.