What is your investment strategy?

[Kriegsspiel]

I'm just curious what strategy we've all chosen.  I'm sure there are more choices that I missed, so fire away.

[Blackbomber]

Other than my retirement portfolio, and my (regrettable) rental property, I'm all in SPY. I started out as a trader, with several equities. I always kept the aforementioned exchange traded fund to balance things out. When things got crappy around 2008, or so, I found myself liquidating my positions. The cash from the stocks found it's way into SPY, and there you have it. I didn't really plan it out, but I'm an index investor, and plan to stay this way. When I read MMM's thoughts on the S&P500 index, it re-affirmed what I had learned the hard way. Hard being relative, as I earned money as a trader, but not as much as I thought I would. I like risks, but I also like actually moving forward, so the index works for me.

[Workin' Man]

Right now I'm all in real estate (personal residence and sfr's).  I'm planning to start Vanguarding in the spring after I finish a kitchen remodel.

[James]

I'm a Boglehead with my invested money, but I would love to work in some rental property at some point as well.  I think the MMM option is a bit narrower than reality, he has rental properties as well as his financial investments.  I don't recall him being limited to S&P 500 instead of the full index, but I could be wrong about that.

[Blackbomber]

I'm planning to start Vanguarding in the spring after I finish a kitchen remodel.

I had to laugh. I'm also in the middle of a kitchen remodel. It might (I hope not, but things aren't going as quickly as I had hoped) not be finished until spring. And I'm also putting all the money I'd otherwise be saving into it. Have fun with your project! It will be worth it when it's done (or so I keep telling myself).

[Another Reader]

Rental properties and more rental properties......

Some paper assets from IRA's and 457 plans.  Not a lot in taxable accounts because most extra money went into buying rentals.  About 25 percent overall in paper assets.  I'm a pensioner as well, thanks to some years working for government agencies.  I count those as annuities but I don't count their capitalized values as part of the 25 percent or even as part of my net worth.  My investment "strategy" with them was to stay working there long enough to be able to collect them.  And then there was that forced "investment" into Social Security.....

Did I mention the rentals? 

[Vangogh]

I think there are several people on here who invest in exempt market securities like Propser, Lending Club, Mortgage Investment Corporations, limited partnerships in apartment buildings, non market REIT's, and other such stuff. I have the majority of my money in these type of securities, plus some market stuff (TFSA). I'd like to get more into real estate, but the canadian market blows.

[Kriegsspiel]

I think P2P lending is a distinct style that I forgot to include.  I didn't think that people used that as their main strategy. I am looking at starting some P2P lending in 2013 with some of my non-Permanent Portfolio money.  What do you  mean when you say "market exempt?" 

[Vangogh]

It refers to securities that aren't traded on a market. The operating principle is much the same. The only difference is that you can't sell your share to someone else. The company will have some redeeming policy to get your money out, but that's it. The up side to all of this is that your shares have almost no volatility. The downside is that the speed of investment is brutal(a lot of work compared to clicking a button on questrade), and there is a chance that you'll get no money back.

[gooki]

Build a business that requires minimal input.

[k9]

I'm mostly on PP ; actually, 33/33/33 cash/gold/stocks as I'm paying back a mortgage, little by little, and counting that as a bond investment. I also have a few hand picked stocks, but very little. I'll invest in rental properties on top of that when my mortgage will be paid back.

[arebelspy]

I'm almost exactly like AR.  Adding +1s to his for me:

Rental properties and more rental properties......+1

Some paper assets from IRA's +1 and 457 plans +1.  Not a lot in taxable accounts because most extra money went into buying rentals. +1 About 25 percent overall in paper assets. +1 I'm a pensioner as well, thanks to some years working for government agencies. +1 I count those as annuities but I don't count their capitalized values as part of the 25 percent or even as part of my net worth. +1 My investment "strategy" with them was to stay working there long enough to be able to collect them. +1 And then there was that forced "investment" into Social Security..... -1

Did I mention the rentals? +1

Literally could have written that, minus the SS (we don't pay into SS at our gov. jobs.)

[Another Reader]

Arebelspy:

I only wish I had started at the age you did.  Keep doing what you are doing for 25 more years, and your net worth may exceed 8 figures, allowing for some inflation and appreciation.  Oh, wait.  The point is to retire EARLY.  So maybe $3M, if you really kick it for the next 12-15 years.

[Nords]

I'm sure there are more choices that I missed, so fire away.

Most of our expenses are paid by my U.S. military pension, which includes a cost-of-living adjustment and cheap healthcare.

Frankly if we cut our lifestyle to the bone, all of our expenses could be paid by my pension.

I've done the present value of this stream of future payments from the equivalent of a portfolio of I bonds, and concluded that most of the rest of our investments should be in equities.  No other bonds.  In fact we also carry cheap 30-year fixed mortgages on our home and our rental property, and those funds are invested in equities.  So our retirement portfolio is 90%+ equities, with two years' extra living expenses in cash.  The cash is mainly to give us enough time to ride out a bear market without having to liquidate equities, but cutting back lifestyle helps extend that a long way.

We own a rental property because when we bought our "dream house", it was easier to keep the first home than to sell it.  We're getting some cash flow from that as well, and 12 years later there's still no compelling reason to sell.  Right now our only exit strategy from that asset class is "maybe someday our daughter will want it" or "probate".

We invested our daughter's college fund in EE education savings bonds and equities up until the time she turned 15.  Shortly after that birthday (Oct 2007) a couple of the equities hit their peak and we started liquidating for CDs.  When we saw what was happening to the stock market we kept the EEs, bought a few I bonds, and put the rest in CDs.  That plan was working out fine, and then our daughter put it over the top by earning a Navy ROTC scholarship for over 75% of her college expenses.

I'm the conservator for my father's finances.  For nearly 25 years of his retirement he lived a low-expense hermit-like existence on his corporate pension, Social Security, and his Medicare supplemental insurance.  He spent about half of his income and banked the rest.  When he was no longer able to live independently his savings were 80% equities and 10% bonds.  His long-term care insurance policy and his pension/SS are currently paying for his living expenses at his full care facility, and that will last for another 15-18 months.  I've spent that time getting his asset allocation down to around 25% equities (mutual funds), 10% bonds, and 65% cash.  With his pension/SS, those funds should be enough to pay for another 15 years of care after the LTC insurance payments stop.

http://the-military-guide.com/2011/03/24/asset-allocation-considerations-for-a-military-pension-part-3-of-3/

http://the-military-guide.com/2011/08/03/join-the-military-to-retire-early-the-rest-of-the-story/

[Ozstache]

I'm another in line for a military pension as the bulk of my ER package. Like Nords suggests, my other savings will be heavily weighted in stocks/real estate as my military pension well and truly ticks the bond-like allocation box of the majority of my 'stache.

[Budget_Ninja]

Bonds/Equity Allocation: ~Age in Bonds

Equities Allocation: 60% North American & 40% International.
Bond Allocation: 60% short term gov't bonds & 40% short term corporate bonds.

Purchase low cost index funds
Re balance every 6 months or on each contribution.
Hedge away currency volatility
Buy & Hold
Employ a tax strategy that compliments my investment strategy.  Don't let tax's guide my investments - just where I hold them
I don't speculate (or at least try my best not to)

[sol]

I'm invested in the equivalent of a lifecycle fund that starts out mostly stocks and gets more conservative as I age.  I've chosen a fund with a target date somewhat beyond my intended retirement date because we will also collect pensions, some day.  We purchase a uniform amount every week, and the fund rebalances automatically every day.

We own one rental property, and will probably rent our current house when we move again in a few years.

We max our tax-deferred accounts and ply the rest into taxable accounts.  The challenge there is balancing our desire for principal protection with our desire for tax efficiency in the taxable account.  Hard to find both unless you're willing to accept returns below inflation.  We rebalance in the taxable account by changing the allocation of our contributions, to avoid having to sell anything and incur capital gains.

[lauren_knows]

I don't have the stomach to seek out rental properties as an investment.  When we eventually move from our townhouse, we might keep it as a rental though.

I'm mostly a boglehead style investor.  Roughly 80/20  Stock Market Index Funds / Bond market index funds.  With any luck, we'll be able to go to part-time employment by 40 and enjoy watching our kids grow up (or annoy the hell out of them?).

[zinnie]

Boglehead-ish. Stock, bond, and REIT indexes. I value average too, instead of DCA. Anyone else here do it? I haven't seen it mentioned much.

[Khan]

My personal stock portfolio and roth accounts are primarily based around(right now) a core position of dividend growth stocks/value plays that I'm fine with keeping >5 years(INTC, GE, AIG, CSCO, SIRI, F). The more beaten down they get in the short term, the better DRIP I get. If one of them goes on a run(as Ford is expected to do for the next several months), I'll probably cut the position somewhat to get the capital gains and distribute it to more interesting value opportunities.

Most of the rest of my portfolio is built up of a couple of small(<2000$) positions in interesting companies that I'm not day trading, but I don't have long term prospects for(Lululemon, Starbucks).

I'm currently unwinding a huge position I took in Nokia 2 1/2 months ago(I know, dividends are the sure long term path to prosperity, but I couldn't ignore the story and the disconnect I felt from the Wall St. consensus and the good news in it). I've made a great deal of profit off of this, and at current levels the stock would have to take a -35% drop for me to get back to breakeven or lose out on what I've gained from it. The stupid/dangerous part about it was that I went on the margin for it. If I had the money I would have used my own, and if I lost it all I wouldn't have been too angry at myself over the year it would have taken to pay it off(and could have sold assets to pay it off anyways).

So my investing thesis is primarily a core group of quality dividend/value stocks, and a little bit around the edges to keep me interested. 2013 I'll be adding in a couple of ETF's(international ones), and a couple more REIT positions.

[John74]

I am roughly 1/3 rental real estate, 1/3 dividend paying stocks, and 1/3 bonds and CDs.

[lauren_knows]

Boglehead-ish. Stock, bond, and REIT indexes. I value average too, instead of DCA. Anyone else here do it? I haven't seen it mentioned much.

Meh.  I like to see my investments go directly to vanguard every paycheck.  It feels like zero work (because it is!).  How exactly do you specifically handle your value averaging method, say across a couple mutual funds?

[sol]

Value averaging only works if you correctly predict average market returns ahead of time.  DCA works no matter what.

[Jamesqf]

Almost everything is in mutual funds.  Roughly 50% "value" investing fund, 20% domestic index, 20% international, 10% low volatility dividend income/bond fund (as my emergency fund).  Don't want the hassles of direct investing or real estate.

[Debbie M]

80/20 is the closest.  I slice and dice mostly with index funds, but sector funds are pricier than the other kind, so mostly I have the other kind.  I have about equal amounts of each of these: large-cap index, [large-cap] hand-picked dividend growth stocks, small-cap growth index, small-cap value index, European index, Asian index, emerging index, REIT index, bond index, and I-bonds.  (Also a tiny amount of play money, currently in Tesla.)

That's mostly in a Roth IRA, but it's small potatoes.  (Even though I've been maxing it out since roth IRAs were invented, 4% of it just isn't much.)  I'm mostly relying on a pension that will cover everything until something in my budget hyper-inflates (health expenses, anyone?).

No real estate except for the REIT index and for having my house paid off.

I did DCA when I had a steady paycheck; now I invest as soon as I have enough money.  I re-balance when it starts to look wonky if I feel like it, with no real definition of "wonky," but it happens about once a year or so.

[Mr Mark]

Boggle.

... in case you read nothing else.

Right now, my portfolio is very distorted by circumstance.
60% in a long term bond that pays about 8% pa guaranteed and tax free, but connected with employment...
22% real estate, comprising home equity, and a long term investment and holiday home
12% vanguard and 401k
2% or so cash
4% in a share in a forest in New Zealand


But the one I have control over in the way you describe the 40k and vanguard,

15 bonds
85 market

I think everyone's investing horizon should be infinite. Every month your net worth should on average go up. For ever. But 100% of stock (or any other investment class) is too much.

With stock I further asset allocated to balanced funds, high yield, emerging markets, REIT s, S+P500, via vanguard funds and 401k, with annual rebalancing on my birthday related date.

I like the diversity and reality of owning outright a piece of a forest, and a long term real estate play in Michigan. In fact thinking about buying a little bit more forest and super low cost per acre land in the UP. Michigan. Say another 2% of stash leveraged with a 30% fixed mortgage. That would get me over 100 acres, maybe with a river.

Once I cash that bond, I'd expand into some MMM  % as I'm a big fan of the 1 or maybe 2 quality nearby low maintenance rental model. And did I mention jack boggle and vanguard? Index funds? Minimise fees!

Plus local investing in 'hyper local' businesses, say up to 5% of stash. Be an angel investor, support good healthy vibrant  businesses in your home base area. And it gives you something to do.

Tax efficiency is important. But frugality more so.

[Another Reader]

+1 for "I think everyone's investing horizon should be infinite."

That's how stable family wealth is built.

[Mr Mark]

I don't like a portfolio that's all paper either. You need some real stuff, somewhere.

Especially land. Rent producing reality of any description that you can touch. Cash flow. Businesses you know are real.

[simonsez]

I'm similar to Sol minus the rental and the taxable accounts; a government 401k + pension. 

Sol, I'm guessing you are talking about L2050?  I do something similar but I manually do the allocation since I don't like the F fund right now so I basically do the L2050 but ratio up G, C, S, and I to take the place of F.

[sol]

I'm similar to Sol minus the rental and the taxable accounts; a government 401k + pension. 

Sol, I'm guessing you are talking about L2050?  I do something similar but I manually do the allocation since I don't like the F fund right now so I basically do the L2050 but ratio up G, C, S, and I to take the place of F.

Yes, I'm making all new contributions to L2050, even though my target retirement date is closer to 2020.  Partly because I think the L funds are too conservative for people who also have defined benefit pension plans which essentially reproduce part of their bond allocation, and partly because I also invest outside of the TSP for shorter time horizons, so I can play long on my old man money.

Lots of folks are down on the F fund right now, but I'm not among them.  Hold the market and stick to your chosen allocation.  Don't try to outguess the collective wisdom of the masses.

I do, however, have concerns about the I fund.  I think it is significantly underweighted in emerging markets.  The international market is not just old world Europe.

The great perk of the L funds is the free daily rebalancing.  Manual allocation is fine if you're attentive, but I have more important things to do with my life.