“Index Portfolio Delivering its Value” was the last time I wrote about my index portfolio many months ago. Then in the dark days in Dec 2018, my index portfolio stayed solid and was above the water when everything else seemed to be sinking. So fast forward to today, I thought I will do a write-up on my index portfolio to record its current status and share this tool with you.
Intro to my Index Portfolio
You probably have not heard me talking about my index portfolio if you only started following my blog in 2019. So, let me just do a simple intro for you.
I started an Index Portfolio in Mar’17 as a trial for a “stress-free type” investment approach, it collects all the mutual funds and ETFs that I invest on a monthly basis at a fixed amount, regardless of market conditions. I heard so much about the importance of staying in the market and thus I wanted to ensure that I would do that consistently and with discipline.
My Index Portfolio was inspired by the concept of the “Permanent Portfolio” and guided by the book, Millionaire Teacher by Andrew Hallam.
It contains the 4 classes of investment products in the following percentage:
- Bonds = 35%
- Equities = 40%
- Gold = 5%
- Reits = 20%
At the same time, I tried to ensure that the porfolio is 55% Singapore weighted and 45% internationally weighted (mainly US, HK and China).
I re-balance the portfolio every 6 months to ensure that the ratios of these investment products remain the same. In between, I record my new investments and dividends received each month but I don’t do active re-balancing.
I am glad to have this index portfolio!
It has served its purpose well, especially in 2018. When everything was red, it was still in black.
I plan to continue to build on it. I see it becoming more and more important to me in the years to come, especially in the years when I no longer have active income.
Let me share the status status of my index portfolio.
Today, the breakdown of the investment products and SG/international ratio are close to my target as I just did a re-balancing last month.
Performance in the Year Including dividends
- 2017: +10.0% (Dividend Yield alone was 2.7%)
- 2018: +1.4% (1.8%)
- 2019 YTD: +10.5% (1.95%)
2 to 2.5% dividend yield is just about what I would expect given 40% of the portfolio is bonds (paying ~ 2% dividend), 5% is gold (0%), 40% is equities (~3%) and 20% is Reits (~5%).
Portfolio Size (Growth)
- End 2017 = Assumed 100%
- End 2018 = 243%
- 2019 YTD = 303% (25% growth over end 2018 value)
It is my aim to increase its value by 50% over end 2018 value by end 2019.
Relative to My other Portfolios
Besides my index portfolios, I have two other portfolios – income and growth. Index portfolio is actually the smallest of the three.
At the start of 2019, the value of my Index porfolio was 13% of my total investment. By end July, it had reached 21%, due to my continual investments in index ETFs (and no selling) and a period of aggressive selling of stocks when the market was strong in June and July.
By the rate it is growing, I am sure it will reach ~50% of my total investment one day. Maybe it is when I retire at 65 years old (OMG!)
Have a great investment week folks