Index portfolio holding up well!

My regular readers would know that I have a special portfolio that holds all my investments in index ETFs and unit trusts. This index portfolio has grew from 20% at start of the year to 30% of my total investment today.

It grew partially because of my monthly regular fixed investments in selected ETFs (capital injection), the gain from some ETFs esp. the US linked ones offset by the local equity linked ETF (capital gain) and shrink in the value of my other investments.

Unlike my growth and income portfolios, index portfolio actually made a gain year to date. It gained 4% in value. Not a lot but I would consider it as good given the current COVID circumstances.

On top of that, I got a 2% dividend yield for this portfolio currently. It may go up to 2.5% as more dividends are expected to come in during the last quarter of 2020.

6% gain is quite decent.

What is special about this index portfolio is that I aim to keep the ratio of Bond : Equity : Gold and Reits constantly throughout the year by rebalancing whenever the ratio is thrown off drastically.

Therefore, if one asset class gains a lot in value compared to the rest or conversely, one asset class drops a lot, I would purchase more ETFs, either in other asset classes or that impacted asset class to maintain the ratio. I avoid selling any ETFs unless I am in need of money.

The ratio I am maintaining is 40% : 35% : 5% : 20%.

Most of these ETFs and unit trusts are available on the local Singapore market or through securities companies (like Phillips) or the banks.

By automating the purchase process, it takes out a major decision need on my part. It prevents me to procrastinate or hesitate to buy. This helps me to fulfill what I believe – it is more important to be in the market that to time the market.

Some of you may remember that I tried out MoneyOwl a while ago. I am still investing monthly in it. It is like an index portfolio investment too. They chose a balanced portfolio for me when I first started and this ensured that I am invested in both bonds and equities. And guess what, it is returning me a 5% gain so far too. It also rebalances every now and then to keep to the philosophy of the “balanced portfolio”.

Going forward, I expect to increase the size of my index portfolio in the years to come. After so many years, I realize that my ability to find undervalued stocks is limited and in most occasions, it felt like speculation. Index investments help me to reduce the stress level associated with investing.

Yes, I may miss out on some of phenomenal superstar stocks but I would gain better sleep in the night and that is priceless!

Hope you find the above useful and inspire you to have a look at ETF/Index investment too.

Have a great weekend and investment week ahead.

Warriortan

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