Portfolio advice

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mikeguima
Posts: 116
Joined: Mon Aug 22, 2016 3:11 pm

Portfolio advice

Post by mikeguima » Wed Sep 12, 2018 2:05 pm

Hello everyone!

After a few years exclusively reading on investing, time has come for me to start building my own portfolio, now that I'm going to be able to contribute to it.

I'm 23 years old and come from Europe (Portugal).

I still haven't settled on a portfolio that fully convinces me, but what I share below is an alternative I've been considering. I have a moderate risk aversion (not jumpy, but not very risk seeking either) and a moderate to long time horizon (have no plans for big ticket items so far).

I'm thinking of a portfolio with a reasonable allocation to riskier assets (60-70%) plus the remaining in mostly safer bonds and cash for protection. I'm avoiding significant asset exposure to my home country because my human capital will likely be completely related to it. I'm also trying to strike a balance between diversification and simplicity when it comes to the number of individual assets I hold in the portfolio, since I like simpler portfolios but don't want to compromise diversification at the same time.

Here's the portfolio I've been thinking of:

30% World Stocks (accumulating, 0.20% TER) - MSCI World
20% World Stocks Smart-Beta (accumulating, 0.40% TER) - Amundi Index Equity Global Multi Smart Allocation Scientific Beta UCITS ETF - EUR (C); exposure to several registered anomalies (size effect, value effect, momentum effect)
10% Emerging Markets Stocks (accumulating, 0.18% TER) - iShares Core MSCI Emerging Markets IMI UCITS ETF
10% Europe REITs (accumulating, 0.33% TER) - Xtrackers FTSE EPRA/NAREIT Developed Europe Real Estate UCITS ETF 1C
10% Euro Inflation Linked Bonds(accumulating, 0.25% TER) - iShares Euro Inflation Linked Government Bond UCITS ETF
10% Global Aggregate Bonds (accumulating, 0.10% TER)- iShares Global Aggregate Bond UCITS ETF EUR Hedged (Acc)
10% Cash

I'd like to ask you for your opinion and commentary on the portfolio above, so I can take them into account. Anything is appreciated!

Thank you very much!

bloom2708
Posts: 4900
Joined: Wed Apr 02, 2014 2:08 pm
Location: Fargo, ND

Re: Portfolio advice

Post by bloom2708 » Thu Sep 13, 2018 9:11 am

Welcome!

You are young and thinking about this. That is the biggest hurdle. Your savings rate (the higher the better) will determine your performance.

If I was 23, I would keep it simple and do this:

90% World Stocks (accumulating, 0.20% TER) - MSCI World
10% Global Aggregate Bonds (accumulating, 0.10% TER)- iShares Global Aggregate Bond UCITS ETF EUR Hedged (Acc)

I would keep an Emergency Fund of 6 months expenses in cash and enough in your checking account to pay the bills for a few months.

I would not keep 10% of my investments in cash. Invest early, invest often. Stay the course and revisit your bond allocation at 35 or so.

The other funds like REIT, Inflation protected, etc. I would not bother with those.

Hopefully others will counter my advice. Welcome again!
"We are not here to please, but to provoke thoughtfulness." --Unknown Boglehead

mikeguima
Posts: 116
Joined: Mon Aug 22, 2016 3:11 pm

Re: Portfolio advice

Post by mikeguima » Sat Sep 15, 2018 5:25 am

Thank you for the reply, bloom!

Setting a fixed allocation to cash or simply holding whetever necessary for emergencies and holding everything else in other assets (effectively separating cash out of my "real" portfolio) is one question I've also had, but I see cash as a balancing portion of the total portfolio which should increase as it increases.

As for 90/10, I feel that may be a little too risky for me. I don't think I'd feel comfortable holding 90% of my investments in very volatile asset classes.

The reasoning behind TIPS is to simply provide some inflation protection, although I think inflaton is unlikely to come about (unless it comes from the supply side). I may consider eliminating REITs, since I'm not fully convinced of their benefits when it comes to diversification.

mikeguima
Posts: 116
Joined: Mon Aug 22, 2016 3:11 pm

Re: Portfolio advice

Post by mikeguima » Mon Sep 17, 2018 3:04 pm

Could anyone else give an opinion? :happy

mikeguima
Posts: 116
Joined: Mon Aug 22, 2016 3:11 pm

Re: Portfolio advice

Post by mikeguima » Thu Sep 20, 2018 5:07 pm

No one? :(

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