In 2018, I wanted to add a few bonds to my portfolio. I am in long-term investing. I only in my 30s and I do not plan to retire for at least 10 years. And I already have some very safe investments in my second and third pillars. Therefore, I do not need a lot of bonds. But I wanted to add 5% of bonds into my portfolio to be safe and to allow for more re-balancing opportunities. Also, I do have bonds in my third pillar account.
Moreover, I wanted to improve my portfolio. More specifically, I also wanted to get rid of my crypto-currencies. So, I updated a bit my previous portfolio to reflect this. Moreover, I also wanted to depend less on the dollar. In this post, we are going to see exactly what I have changed in my portfolio. Remember that it is only one example of a portfolio. I’m no financial advisor. I am just sharing what I am doing for investment. What may work for me may not work for you.
My new portfolio
After the changes, this is the new portfolio I’ve settled on:
- 50% World Stocks – Vanguard Total World (USD)
- 10% Switzerland Medium-Cap Stocks – UBS SMIM (CHF)
- 10% Europe Stocks – iShares Europe (EUR)
- 10% High Dividend World – Vanguard High Dividend Int. (USD)
- 5% High Dividend Switzerland – iShares Swiss Dividend (CHF)
- 5% Tech – Vanguard Information Technology (USD)
- 5% Pacific – Vanguard FTSE Pacific (USD)
- 2.5% Europe Corporate Bonds – iShares Core Euro Corporate Bond (EUR)
- 2.5% Europe Government Bonds – iShares Core Euro Government Bond (EUR)
I would not really recommend a portfolio exactly like this. Indeed, for now, it is still too complicated I think. You probably should get rid of Tech and Pacific. I have shown this portfolio to a few people and they all think it is too complicated. I’m going to think on improving this portfolio in the coming months. I’m starting to realize that for investing, simpler is better. So don’t do like me ;)
Update: I have now made some changes to make my investment portfolio much simpler.
For the bonds, I decided to split in half between corporate bonds and government bonds. I decided to go with Europe bonds because it is a bit wider than Switzerland. And also because Switzerland bonds are in negative yield right now. At the beginning I wanted to select the bond duration myself. But then I decided to keep it simple and use the iShares Core ETFs. I also added 5% of Switzerland Dividend stocks, again using a iShares ETF. I removed 5% from Vanguard Total World for this. The reason for this is that I wanted a bit more of passive income from my investments.
My actual portfolio does not perfectly reflect this model. I still have a Bitcoin ETN that I will sell if it gets back to earning. I also still have a small PostFinance Emerging Debt fund (less than 200 CHF) that I’m also waiting to get rid of. Finally, it’s not totally balanced yet, but it’s getting there and a small imbalance is not a big problem. I will only do re-balancing at the end of the year if it really gets out of control. Since I try to invest a bit every month, I use this investment as a balance mechanism as well. Unless one of my positions in my portfolio really gets too high or too low, I should not have to rebalance at all.
Here is the current state of my portfolio:
And here is what it should look like according to the new portfolio I’ve designed:
As you can see, I still have some work to rebalance the portfolio. Since the portfolio is currently very small, it is not easy to reach the good numbers. Indeed, I can only buy complete shares and thus cannot choose exactly the value. This should get easier as the portfolio gets larger. I am also realizing that very small percentage in a portfolio are not very convenient. This will be fixed once I will have simplified my portfolio.
At the end of this month, I’ll invest more in Vanguard High Dividend International which is my most imbalanced ETF now.
What do you think of my new portfolio ? Do you have any advice for me ?