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)