Portfolio - please comment/review :0)

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whatsmoney

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Hi folks

I am building an investment portfolio that I plan to drip feed a significant lump sum into over the next number of months/years.

I have done a lot of reading on various websites like ETF.com, ETFdb.com etc and also read 3 great books to help me along, which I would really recommend. I wish I had the knowledge they contain 20 years ago....

3 Steps to investment Success, Rory Gillen
Secrets of Wealthy People, David Stevenson
Buffett, The Biography, Roger Lowenstein
Also, The Education of a Value Investor, Guy Spier - but it's not so good.

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My Portfolio breakdown is as follows:

60% Core Equity Portfolio,
24% Satellite Equity Portfolio,
10% Gold/Silver/Crypto,
6% Bonds
(I don't intend to invest any into property as i'm ok on that front)

Here is the further breakdown (Expense Ratios in brackets):
Core Portfolio - 60% allocation, equal weighted between 5 listed below
ISHARES CORE DIVIDEND DGRO (0.08%) - US Dividend Stocks
VANGUARD MEGA CAP ETF MGC (0.07%) - US Megacap to track S&P500
VANGUARD FTSE DEVELOP VEA (0.07%) - Developed Markets excl USA
ISHARES CORE MSCI EMER IEMG (0.14%) - Emerging markets
iShares MSCI Eurozone ETF EZU (0.48%) - Eurozone excl Brexit UK

Satellite Portfolio - 24% allocation, equal weighted between 5 listed below
iShares U.S. Medical Devices ETF IHI (0.44%) - US Health Tech
Vanguard Value Index Fund VTV (0.06%) - US MegaCap Value Stocks
Vanguard Mega Cap Growth Index Fund MGK (0.07%) - US Megacap Growth Stocks
iShares Exponential Technologies ETF XT (0.47%) - AI/Machine Learning Tech Stocks
Berkshire Hathaway B shares BRKB - Cos I like Warren
(As this is a satellite portfolio, it will be flexible, so I can add different stocks/ETFs as I go along.)

Gold/Silver/BTC - 10% allocation, of which 70% Gold, 20% Silver, 10% Crypto
Bullionvault Gold (0.5%)
Bullionvault Silver (0.5%)
Cryptos approx. (0.25%)

Bonds 6%
I haven't structured this yet, I need help as I don't fully understand the bond world....
I am thinking to split equally between something like:
-US Longterm 20+ year Government Bond ETF
-NonUS Longterm 20+ year Government Bond ETF
-Corporate Bond ETF
-High Yielding Emerging Markets Government Bond ETF
(Regarding the 6% Bond allocation, the David Stevenson book suggests to allocate 2% per year from 40 years old upwards, so by 50 you have 20%, by 60 40% etc, which I think is a good idea.)
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All my ETFs are US ones to avoid the onerous Irish tax implications, but because I am dollar cost averaging I hope that the USD/EUR Exchange Rate won't matter too much in the long run. (Any ideas on number of months/years I should Cost average into?)

Thanks for any help, especially around the Bond construction element.
 
Well in my opinion the proposed equity portfolio looks gratuitously complicated and there is a considerable amount of overlap between those funds.

Why not simply invest in a world equity tracker (something like Vanguard Total World Stock ETF (VT)) and be done with it?

If you have a particularly strong conviction about any particular company/region/sector/factor then by all means add an additional ETF to create your desired tilt.

If you're a fan of Mr Buffet you might want to consider his views on gold. Frankly, I wouldn't bother including precious metals or crypto currencies in your portfolio.

I also wouldn't bother with a 6% allocation to bonds (or any other asset class) - it's too small to have any meaningful impact. Another perfectly good option is to simply keep this element of your portfolio on deposit or invested in tax-free State savings products. In any event, I wouldn't invest in fixed-income securities that are denominated in any currency other than Euro.

Dollar cost averaging is just another form of market timing. Historically, over rolling 10-year periods, you would have been better off roughly 2/3's of the time simply lump sum investing in equities.

Make sure you fully understand the US estate tax issue before you invest in US ETFs.

Also, it is not necessarily the case that US ETFs will produce a better tax results than Irish ETFs - it very much depends on your marginal tax rate, the assumptions you make around capital gains, dividend income, etc.
 
Thanks for your input Sarenco, it's appreciated - you have some very good points... perhaps I'm over analyzing things.

I suppose the reason I'm diversifying the equities like this is so that I can withdraw/stop contributions towards some equities if they don't look good over time.
If I was totally invested in VT I wouldn't have that option... not sure if that makes sense. Perhaps it mightn't be worth the effort...

I did read Buffett's comments on gold... but my thinking is if I am investing regularly over time, and there is a run on gold/silver, I can sell up,
take the profits and rebalance. Also gold is a diversification against equities - if equities go down, there is a chance that it could be counterbalanced
by rising gold/silver price. Silver seems cheap at the moment also.

As for crypto currency, that is more of a gamble... I do think that it has a future, and I'm happy to invest a small amount over time and see how it goes.
I've read a bit about it and it seems to be getting a lot of traction... Bitcoin is valid currency now in Japan and Russia are showing interest.
But it's just conjecture I know at this stage.

Your comments on bonds are also valid... but the rates on Irish Post office Certs/bonds are appalling... If I got US/world bonds I would think that they would return more.
I'm not expert on these. If anyone else has comments on this it would be great.

Regarding the tax implications of ETFs... I read about the 8 year roll up rule etc... I think consensus on this is that it's a lot of hassle.
US ETFs are just treated like regular shares, so easier to manage. I'm not looking at it from a tax saving point of view.. I need to go back again and check that.
(Also regarding estate tax, I'm currently not in a situation where that matters...but i'll check again into that, thanks)

Regarding the dollar cost averaging, I have a lump sum, and my thinking is if I pay slowly into the funds, if/when a crash does happen, I can go 'all-in' at that stage.
It is an attempt at timing the markets... I agree with you on that and it is my intention.
 
When you buy cryptos on an exchange (eg gdax.com), they charge a fee on the transaction... so that's where it comes from.
 
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