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My New Hypothetical Asset Allocation…

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In my previous post, I detailed how I would allocate a hypothetical $100,000 portfolio. I had a few goals in mind when I was creating the portfolio:

  1. Keep expenses low. Some expense ratios are over 1%, which is a high price to pay if your balanced portfolio returns 8-10% a year.
  2. I'm young, so I want a large percentage to be in stocks and just a little in bonds in case we hit a bear market as a minor hedge.
  3. I want to be diversified. I had bought individual stocks in the past, but it seemed to be closer to gambling than investing for me. If I had enough money to spread it around amongst many individual stocks, than perhaps I would do that. For this exercise though, it doesn't make sense for me.

For those that need the refresher, here was the portfolio that I decided on over 4 years ago:

- iShares Russell 2000 Index (IWM) - $25,000
- SPDRs (SPY) - $25,000
- Vanguard Total Intl Stock Index (VGTSX) - $10,000
- Technology Select Sector SPDR (XLK) - $10,000
- Utilities Select Sector SPDR (XLU) - $10,000
- iShares Dow Jones US Real Estate (IYR) - $10,000
- Vanguard Total Bond Market Index Adm (VBTLX) - $10,000

And my new portfolio if I could design it today would be:

Domestic Stock ($35,000)
- Vanguard Total Stock Market Index ETF (VTI) - $25,000
- iShares Russell 2000 Index (IWM) or Vanguard Small Cap Index ETF (VB) - $5,000
- SPDRs (SPY) - $5,000

International Stock ($20,000)
- iShares Global S&P 100 (IOO) - $5,000
- Vanguard Emerging Markets ETF (VWO) - $5,000
- Vanguard European Stock (VGK) - $5,000
- PowerShares China (PGJ) - $5,000

Sectors ($25,000)
- Sector Bets: I typically screen for some under performing sectors. That's why I stumbled into utilities 4 years ago. That would have been one of my best performers. I love technology so that's a must for me. I'd take a health care one as an aging baby boomer play. Energy as a hedge against rising gas prices in the future sounds like a smart plan. I'd grab a financial one as well - what's a better place to put your money than with people who know money?

Real Estate ($10,000)
- Vanguard REIT Index (VNX) - $10,000

Domestic Bonds ($10,000)
- iShares Lehman Aggregate Bond Fund (AGG) or Vanguard Total Bond Market Index Adm (VBTLX) - $10,000

That's how I'd allocate things today if I could. Finally, it's disclaimer time. Please don't consider this financial advice and see your own financial advisor before investing. I'm first and foremost an idiot.

Last updated on July 29, 2011.

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3 Responses to “My New Hypothetical Asset Allocation…”

  1. […] Lastly, I am going to look into putting some money (the last 20% I suppose) in Zecco.com to buy a diversified portfolio of funds with low expense ratios. I realize that Zecco.com is new as well, but I trust they are well regulated (I will confirm before I start, trust me), so I’m not overly concerned about this part of the plan. […]

  2. […] And here’s what I said about making Sector Bets with ETF in My New Hypothetical Asset Allocation: […]

  3. […] here’s what I said about making Sector Bets with ETF in My New Hypothetical Asset Allocation: Sector Bets: I typically screen for some under performing sectors. That’s why I stumbled into […]

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