Lazy Man and Money

Let’s Play “Invest Lazy Man’s Money!”

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Regular readers know that over the years I’ve taken suggestions on how to invest my new Roth IRA money for the year. It’s that time of year again. Give me your best suggestions.

Before you do, let me clarify a few things. To a great degree, this is meant to be fun. It would be ridiculous to take investing advice from strangers who don’t know your risk tolerance, asset allocation, and other important details. So take it a little seriously (I’m not investing in pork bellies), but not too seriously.

That said, I always give readers a little guidance:

  1. Value-Driven – As some might have noticed with my individual stock purchases over the last couple of years, I love stocks that have been beaten down. I like to buy equities at a discount. I feel it gives me some protection from it going lower and a “return to the norm” can lift it up.
  2. Diversified – I have enough individual stocks. I’m not looking to hit a home run by investing in some biotech company that may grow 20% in a year… or bust on an accounting scandal. This is about slow and steady winning the race.
  3. Give Me Risk – I’m 38, and I plan to live to 138. So with a hundred years to go, I’m focusing on great returns, not necessarily safety. Let’s be aggressive.

I’m also going to give an example of something that I’m strongly considering: BRICs. BRICs are an acronym for Brazil, Russia, India, and China stocks. Some of you may remember the BRIC craze in 2007 or 2008. I haven’t heard much about them in awhile, and looking at the value, it seems like that’s a good thing.

I know there’s a ton of risk of investing in Russia, but it’s likely to be less than 25% of this investment, which would be less than 2% of my whole portfolio. If all the Russian companies in the index went to zero, I would still be fine. On the flip side, it seems like things might get better over the next hundred years and their stocks will appreciate.

There’s a sign that things may be turning around for India and China as well. I saw news today that their indexes are at one-month highs. It’s a positive sign, but maybe I should have bought into BRICs a month ago. The value may not be the best it has been, but they are still diversified and an aggressive growth play.

So give me your suggestions. I hope to be active in comments with you.

Retirement Accounts Funded (and Personal Finance Links)

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Slipping in just before the tax deadline, I was able to squirrel away close to $19,000 in various retirement accounts. Because almost all my income was 1099 last year, a good portion of it was via a SEP-IRA. The rest of it was via Roth IRA.

Now it’s time to start investing that. I’ve decided that I’m going to focus on PowerShares DB Agriculture Fund (NYSE:DBA). I consider that ETF a way to broadly track quite a few commodities – something that most people have limited exposure to. The rest of the money will likely be split into my old standby ETFs – VTI and VEU. I’m contemplating adding some bonds (via symbol BND), but I’m still thinking that at age 34 I want to be very aggressive.

With that said, here is some good reading to keep you busy for awhile.

The Money Writers:

Top PF Posts:

I Share My Asset Allocation (as do 7 other Money Writers)

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The Money Writers is having a group writing project. Each of us have decided to share our asset allocation and performance from the first of the year to last Friday. You might want to put the children to sleep, this could get ugly.

Asset Allocation

I would like to say that I put together a great graph for you, but I didn’t. My only excuse is what you already know… I’m Lazy. Instead I’ve put together my portfolio holdings inside my retirement accounts. You may ask why I don’t have significant money invested outside of retirement accounts. Good question and I’m not sure I have the best answer. I believe in having a healthy emergency fund as well as maxing out my retirement accounts (401Ks and Roth IRAs). I’ve also bought some significant private stock in companies I used to work at. I can’t sell these shares and I can’t communicate them to you (they’d give away my anonymity to a number of people).

Below is my asset allocation. You’ll notice that one Roth 401k doesn’t make the tickers very readily available. I know I could look them up if I went to click through some PDFs, but it’s not really important to me. My goal with each account is to be fairly diversified. I know it’s not perfect diversification, but I plan to roll them over into a Zecco IRA when the economy rebounds. There I can invest in low cost ETF (as you’ll see in my Roth IRA where I have more trading ability). I don’t want to move it while the prices are low in the off chance that we get a recovery while I’m out of the market shifting the money.

lazy-man-portfolio.jpg

I don’t know if anything in particular sticks out with this asset allocation. I suppose the shares of Google stand out, since it’s the only single company that I specifically went out of my way to own. I like to think of it as a hedge. Many websites, including this one, rely to some degree on Google sending traffic which leads directly to advertising dollars. If Google continues to monopolize Internet search, I want to stand to gain in the off-chance that they update their algorithm to hurt my sites. That said, you can tell I still don’t have a lot of money in Google.

The other thing that I find interesting is that I have just 20% of my money in international stocks. This is the first time that I’ve looked at it in totality and I’m disappointed in that allocation. I want to have much more money overseas. I don’t mean that to be anti-American.  I think it’s simply arrogant to keep 80% of my money in one country. It’s not just any one country, but the one country that I depend on for my income. It feels like working at a company and investing in the company stock… one bad turn of events and you could be wiped out.

You are probably wondering two things at this point. The first: What’s the return on portfolio like this? I’m 7.22% in the hole YTD. I would like to say that I found a way to stay positive, but the market has just not been good. Long term, I still think diversified equities is a solid investment.

The other question you might be wondering at this point: How are the other Money Writers doing this year? I’m afraid to look, I’m sure they are doing better than me. Just so you have good laugh at my misery check out their asset allocations: