My Investment Buckets – An Overview

My investing style is very much objective driven and I tend to follow the systemic approach. Whenever I think about my investments, I tend to look at from the full portfolio investments perspective. I believe in continuous evolution, and hence I make changes as I learn more about any aspects of investing.

I follow combination of active and passive investment process. All of my retirement investments use active investments, in the sense that they use mutual funds and bonds as investment vehicles. Although I am not a fan of mutual funds, I do not have any control on the choice of the funds in the 401(K) plan. It runs on auto-pilot and hence, I do not plan to discuss this aspect of my investment on this blog spot. Outside of my retirement investments, I have three investment portfolios which are described below:

Portfolio 1: Index-Based Exchange Traded Funds (30%)

The objective of this first portfolio is to replicate the market performance. I am currently invested in three

Index ETFs viz. SPY, EEM, and EPI. My target percentage allocation for Index ETFs is 30% of my portfolio investments. I also use S&P500 as the benchmark for all of my investments.

Portfolio 2: Opportunity Portfolio (20%)

This second portfolio is sub-divided into two groups.

  • Value-focused stocks (10%): The objective here is to invest in companies which I believe are undergoing short-term difficulties but are worthy of long term investment. Limiting myself to 10% helps me reduce the risk of over exposure in risky stocks.
  • Asset Allocation ETFs (10%): The investment is this sub groups gives me room for investing in areas which I am not familiar with and hence capture the full domain. Here, it is not necessary to look for dividend based opportunities. It helps in diversifying across one particular category without attempting the look for a unique opportunity.

Portfolio 3: Dividend-Focused Portfolio (50%)

The third portfolio is allocated to income producing dividend-based investments. The objective of this portfolio is to generate increasing passive cash flow and long-term capital appreciation. The total target allocation is 50% of my portfolio investments. It is sub-divided into two groups.

  • Dividend-focused stocks (35%): The objective in this sub-group is to invest in individual stocks/companies that provide consistently growing dividends.
  • Dividend ETFs/CEFs (15%): The objective for this sub-group is to capture the diversification benefits of dividend-based stocks.

Majority of the discussion on this blog spot will be on my dividend-focused portfolio. Depending upon the relevance of a given topic or investment vehicle, occasionally, I may also discuss about my other two portfolio investments.

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