Critique my portfolio

Hi,
I'm interested in pursuing the Boglehead portfolio. I have questions about my proposed portfolio.

Emergency funds: I have three to four months worth. I also have a pension scheme and my employment is secure.
Tax Filing Status: Married
Age: 36
Desired Asset allocation: 50% stocks / 50% bonds (according to the Vanguard test)
Investment type: medium-low risk.
I have EUR10k the childcare state savings account. 5.5% return after 5 years
I have EUR5k in shares for a company I work for.
I have another EUR3-5k in various current and short-term savings accounts

From January, I'm considering investing
* EUR1k every 2-3 months in the Vanguard Total Stock Market via Degiro.
* EUR150 every month in shares scheme with my employer
* EUR270 in the state savings account per month

I increased my pension payments recently, so this is not the priority as my goal is savings for the next 5-10 years.

Is this the right Vanguard fund to invest in?
Should I allocate some of this portfolio to the NTMA 10 year solidarity bond?

Vanguard Total Stock Market ETF (VTI) only covers the US market - Vanguard Total World Stock ETF (VT) covers, essentially, all publicly traded equities accross the globe.

It's important to think of all your accounts (pension and otherwise) together. Do you know how your pension fund is invested? You may well find that your pension is substantially invested in equities so to get to 50/50 (equity/fixed income) allocation all your after-tax savings should be retained in fixed income instruments (including deposit accounts and State savings products).

Personally, I think that 5 years is too short an investment horizon for equities - even 10 years is a pretty short investment term. I would just stick with 5-year State Savings Certs for that portion of your portfolio.

Hope that helps.

i put 150 k in an ex U.S etf ( american domiciled ) back in july , my reasoning at the time was the weak dollar would offset any gains in the u.s market for us in euroland , in reality the u.s market has performed better by a few points than europe , japan and the uk etc since the middle of the year , its rare if ever that any developed market beats the u.s for any substantial length of time , its likely having everything in the likes of the s + p would deliver just as good a return so your approach OP is probably pretty sound , if your under forty five , 50% bonds would appear a little conservative in my opinion however

galway_blow_in said:

its rare if ever that any developed market beats the u.s for any substantial length of time

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Sorry Galway but that is not correct. For example, developed ex-US stocks comfortably outperformed US stocks over the first decade of this millennium.

Of course, past performance tells us nothing about the future.

Hi Bryan,

When you say your employment is secure - are you saying it's essentially on par with being a permanent state employee, or something less ? If it's something less, then I think a minimum of 6 months cash is appropriate and perhaps as much as 12 months, if you work in a semi specialised or cyclical sector. Once you cross 40 years, I would suggest you definitely bring it up to 12 months cash at a minimum, as securing alternative employment then becomes more difficult, if you happen to become unemployed.

Are you holding shares in your employer as a result of participating in some sort of preferential scheme, or just at arms length as you might hold any other quoted share ? If the later, then perhaps you should be consider reducing your dependency on your employer to just your salary and reinvesting the funds currently held in your employers share somewhere else, to reduce the concentration risk a little.

Any new share scheme, where there is a particular incentive to participating, is a different consideration and most likely one worth participating in, if you have the spare cash.

At age 36, I would want something with a little more risk in it, then what might be categorised medium to low. That said, 50:50 between stocks and bonds seems more than "medium to low risk", imho - if rating it out of seven, I would rate it 3-4, with 7 being the highest risk. Obviously, this must be driven by your appetite for risk and desired return over the period, so if you are a more risk adverse person and happy to accept a lower potential return in exchange for less risk, then that's perfectly fine.

One last question, if I may ... where are you with regards to debt (homeloan, and any other borrowings) ?

Hi,
I work in the private sector for a multinational. I also have a side business. My wife is a permanent state employee.

The share scheme is a preferential one.

Yes, I have a 200k tracker mortgage with 100k equity. We don't have much other borrowings.

Based on the plan I posted above, I could see us at 9-12 twelve month's cash savings by end of 2018 baring any big changes.

Bryan99 said:

Yes, I have a 200k tracker mortgage with 100k equity. We don't have much other borrowings..

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In that case, I would suggest you consider paying off all debts before investing your after-tax money elsewhere.

There's not a lot of point holding bonds with a (taxable) yield of 0.59% (the current yield to maturity of the EMU Government Bond Index) while simultaneously carrying debt.

Sarenco said:

Sorry Galway but that is not correct. For example, developed ex-US stocks comfortably outperformed US stocks over the first decade of this millennium.

Of course, past performance tells us nothing about the future.

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that i did not know , i had presumed the bear market of 2000 to early 2003 was as bad for europe as the usa ?