Today was the first time I’ve invested money since March 17, 2013.
Looking at the money I regularly invest, the proceeds are clearly coming from far more than my (and my wife’s) salary. Dividends (my brokerage doesn’t automatically reinvest them) earnings from my freelance articles and my book have juiced my invested deposits significantly. But I want to be honest about how much I’m buying, so here it is.
I placed an order for 530 shares of Vanguard’s EAFE international stock market index. The last time I posted about my money, my portfolio looked like this:
March 17th, 2013:
- 38% Canadian bond index (as a Canadian, I have a home country bond bias)
- 30% International stock index
- 32% U.S. stock index
Today (May 7th, 2013) it looks like this, rounded to the nearest whole number:
I’ve always wanted to keep my bond allocation similar to my age. As a newly turned 43 year old, my target fixed income allocation would be 43%. But market gyrations don’t bother me much, so I’ve decided to keep my bond allocation hovering around 40% of my total. As such—especially after my big bond purchase in March—I’m satisfied having 41% of my portfolio in a Canadian bond index.
You might notice, by the differing allocations above, that my international stock index has outperformed my U.S. stock index since March, gaining 5% compared to 3.6% for the International stock index, and 3.6% for my bond index. Having said that, it’s still under-represented in my portfolio. I like my international and U.S. exposure to be equally weighted.
Does it really matter? No. Just establish a goal allocation and stick relatively close to it. My U.S. index holdings are currently $20,000 higher than my International index allocation, so this month’s purchase should even things up.
I’m not a stickler for exactness. No studies, after all, suggest that being precise with your allocations is any better than letting it drift a bit.
Stay chill, remain calm, and invest your savings into diversified products with low expense ratios. Many years from now, you’ll be glad you did.