My Planned Portfolio

The last few weeks, I have written about a few of my holdings in my retirement portfolio – something which I hope will support my wife and I from the time we decide to stop working until we don’t need money anymore. Today, I’m going to lay out my current “end game” for when I am fully invested.

Over the course of reading many investing and personal finance books to come up with a plan that meets both my risk profile as well as providing the necessary cashflow that my wife and I require. There are so many points of view on what “proper” securities are, and what you should stay away from that making up a financial plan gets very confusing. Because retirement investment plans cover such a huge expanse of time (I’m hoping for another 60 years, which would get me to 95), the stuff I’m investing in today at age 35 may not make any sense to me by the time I turn 45.

The following represents the 3 main categories that will make up my portfolio.

80% – Income Producing Securities

These investments will made up of dividend producing stocks and Real Estate Investment Trusts. The purpose of this group of investments is to hopefully replace the income that my wife and I are each currently spending 40 hours every week working.

There are risks with having an equity allocation this high, it is contrary to at least 40% of investing and personal finance books I’ve read. I’m not sure who wrote it, but I prefer to follow the tenant that I’d rather have 20 or 30 sources of income (separate stocks I’ve invested in) than depending on one salary now. As long as I’m correct on the vast majority of my investments in this category, I think my wife and I will be okay being dependent on these investments.

15% – Bond Funds

The purpose of the bond funds are to stabilize the retirement portfolio. The stable bond yields will decrease the overall portfolio yield, they are “safer” investments due to the more stable and predictable nature of bond yields.

One thing that I hadn’t thought about, but Nelson from Financial Uproar wrote about was the benefit of having bonds available to sell in down markets in order to buy more stocks. He writes that because in a down market, bonds generally increase in value, they are a good source of cash when there are buying opportunities.

5% – Value Stocks / Speculation

This percentage of my portfolio may increase as I get more comfortable with investing. I am mostly too impatient with investing in stocks that would be deemed “value” stocks, mainly because the return on these types of investments requires the rest of the stock-buying public to be involved with the stock. I think there is merit in having these kind of investments, and that they could result in significant capital gains if done correctly, but I’m not willing to invest huge amounts of money in this category at this time.

So, that’s a proposes bird’s eye view of how I’m currently investing in securities. What does your plan look like, and how did you decide on it?

2 thoughts on “My Planned Portfolio”

  1. What rate of return do you use while forecasting the growth of your portfolio? I’m specifically thinking about the rate of return during the growth phase before retirement, not the 4% safe withdrawal.

    My current portfolio looks quite similar to the one you’ve outlined here, except I use index ETFs instead of income producing securities. I plan for a 4.5% return after inflation. I got this number by looking at the 20 year returns of the TSX and subtracted inflation from the same period.

    1. I’m planning for an approximate return of around 5%, but am hoping for higher. This return is based on the average dividend yields with the hope of some capital gains.

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