Part 4 - Easy DIY Investment Portfolio





Hi folks

So this post it totally unnecessary to building a simple investment portfolio  - it is an interesting extra only. If you are looking for the necessary bits, go back to Part 1 and Part 2 and read those.

Now, it is important that you know that I am not a financial adviser so always please do your own research. I love to write about money, frugality, budgeting and living a simpler life to encourage others to do the same in their own way. I hate the stupid taboo of not talking about money and hope to encourage a helpful shifting of that useless paradigm.


Step 6 - Add A Personal Theme

I know of some very sensible people with very wise portfolios who also reserve a portion of their investments to speculate with - some fun if you will. Perhaps a little day trading, some penny stock trading or some Bitcoin etc.  Not me! My 'fun' comes in the form of 10% of my portfolio dedicated to an investment theme that interests me greatly but which still honours the principles of low fees, good return over the long term and that I can buy and hold.

Here are some worthy themes and the stocks we might buy to support those themes:

  • Property - Try this ETF  - VAP  (Far easier than chasing rent and fixing white ants)
  • High Dividend Yield - try this ETF - VHY  (Vanguard chooses the highest dividend payers)
  • Emerging Markets - try this ETF - VGE  (Invests in countries and regions that are growing)

Of course, that is just three of many themes we could invest in - it is a personal choice at the end of the day. You'll also see that I chose Vanguard ETF's to demonstrate that themes can be supported by wise and prudent products - there is no need to use risky or questionable products for our theme.

I think having a 10% portion of our portfolio dedicated to a theme that really piques our interest is important.  It keeps things fresh and engaging. The only proviso is that whatever this theme is, we must still aim for low fees, long term buy-and-hold and prudence. We need it to be a investment, not a flutter on something we do not understand.

I personally love dividends (as is obvious by the first post in this series showing the wisdom of LIC's) - so it stands to reason the theme I have chosen for myself is that of high dividend yields.  To that end I use Vanguard's High Yield ETF  - VHY as my theme. 10% is allocated to VHY in my portfolio. The wonderful thing about VHY is that it pays those delicious dividends every quarter instead of annually or bi-annually.

Below is what our finished portfolio looks like now. I have inserted VHY for the sake of the illustration but of course you would replace that with your own choice of theme.


Finished Easy DIY Investment Portfolio
  • Cash 10%
  • LIC's 40%
  • International ETF 20%
  • International Hedged  ETF 20%
  • Theme - High Dividend Yield ETF 10%




Now, if this all looks like too much hard work and you would rather just buy one product that does a similar thing then check out Vanguard's Diversified High Growth ETF recently released. It's symbol is VDHG. I also posted bout this product recently HERE.

Anyway, I have had fun sharing how to build an easy DIY investment portfolio with you all. These posts have attracted very little reader interest which indicates to me that that there seems to be a disconnect on how frugality and wise money management easily translates into self management of investments within the simple living community. That astounds me, as the wonderful simple living community have already done the hard work when it comes to money - investing truly is the easy part.

Either that or, the taboo of not talking about money still persists.


Anyhow, take care and stay nice folks - (two sleeps till Xmas!)

Mr HM (Phil)





Comments

  1. Have a wonderful Christmas, Mr.HM. The whole investment issue is a tad too late for me and too difficult to understand to be honest. I am sure it has been a big help to others though who are in the younger age bracket.

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    1. You clearly have your affairs sorted Nanna Chel, however there are the next generation and the one after that that you can directly influence positively with not only your frugal approach but also encouraging them to learn about prudent investing - it may be one of the most important pieces of money advise you ever give them. After all, time is the key to wise investing.

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  2. Keep please writing these posts Mr HM! I really enjoy reading them. When I get around to investing I will definetely be rereading them :)

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  3. Do you invest outside your retirement accounts Phil?
    So far I only have retirement accounts. Because I don't max out one of them, I wonder whether it makes more sense to max it out ( or try to) than opening a brokerage account for investing. I need to research this a bit more.
    Thank you for the post. I wish you and your family a merry Christmas!

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    1. Both Nil. My mistrust of legislation tampering with retirement accounts drives this approach. However, I get the best out of my investment accounts by understanding them fully. However investing outside of retirement account (whilst not quite as tax effective) allows me to self-fund a retirement or partial retirement well before I am able to access retirement accounts. If you intend not to retire before you are allowed to access your retirement accounts then stick with them (but do your research as US is different to Australia)

      Merry Xmas to you and yours too Nil

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  4. I've found these posts really interesting. It's often hard to find clear and easy to understand info on , investing in Australia. I follow a heap of FI/RE blogs but the investing bit had always overwhelmed a little as we don't have the same system. So thanks for this great mini series. Sorry I didn't comment earlier to let you know I was reading with keen interest. Now to take the plunge....
    Enjoy the festive season.
    Cheers, Laura

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    1. I know right! I follow heaps of FI/RE blogs and many are US or Canadian based and whilst the principles are sound the modus operandi is very different for Australia and it takes so much mental effort to 'translate' it. My comment about lack of interest in these post was based soley on the traffic through them (comments are not really an indicator of engagement with readers)

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  5. I've been following your 4 part series with interest. I am sure many others have too, despite the lack of comments.
    I'm not in a position to be planning out portfolio ratios just yet, as I'm really just getting started with acorns (thanks to your post!) and focusing on getting my car loan paid off.
    You are right though: investing, particularly in index funds, suits the simple life - it's the 'lazy' way to invest, yet generally generates a steady return, in a slow and steady way.

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    1. Ha ha Jay. I do not use comments to measure reader engagement - the more money-centric the post, the less traffic it pulls....weird. (hence my observation)

      Well done with the car loan smashed - you'll be stoked when it is done and dusted.

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  6. Oh come on Mr HM - no Bitcoin? Haha ;)

    I think readership is slow due to the time of year - many people busy/preoccupied.

    The investment articles are always my favourite. Also my favourite to write as well, whether people like them or not!
    I like P2P Lending (RateSetter) currently as our 'fun' type investment. Returns are quite attractive (income only) and it's interesting to see how the new tech works.

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    1. Hee hee - but seriously, I think an alternate currency is certainly a possibility in the future, I just see it as a way too immature thing at the moment. I doubt crypto currencies will mature in my lifetime.

      Yeah, maybe it is the Xmas slow down in reader traffic, but I bet if I put a post up about my frugal weight loss progress it would get hits galore!

      I must look into P2P lending further - I just need to understand it better, but it is certainly on my list of things to study up on. Expect a few questions in the future.

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  7. Hi Phil, love your blog, I have been reading it for the past few months and am fascinated by your knowledge and fantastic attitude. We are in our seventies and our strategy was very simple, we bought properties, as I have to admit I like bricks and mortar. We improved them as a lovely hobby whilst working full time. When we retired we sold them gradually and lived off the income and now we have the home we live in and one more property to sell, if we run out of money we can downsize. We have tried renting some of them some successfully, some disasterously, it has been an interesting way to make money and the work we put into them was a pleasure so for us they have been an enjoyable and simple way to invest, I think you have to start from a reasonably young age to do this and to enjoy building and landscaping as a hobby, our strategy was probably brawn over brain, I really admire your commitment
    and research and the way you explain it all, if we had read you when we were young I think
    We would have followed a different path but we got there in the end. Keep on inspiring people
    with your wisdom. Warm regards Carol

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    1. Thanks Carol. Thank you for sharing the short version of your investing journey here too. There truly is so many roads to the same destination. My goal is to positively influence my 5 daughters to start young with an investment plan and stick at it.

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  8. I think they very informative and helpfull will refer back to them . Always look forward to your posts,

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    1. Thanks Brian - I'm feeling encouraged by that feedback.

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