Share your portfolio

Lots of ideas

There was a really interesting thread on the Forum this week with the title share your portfolio. I was going to reply there but then I figured if I was going to do the work of writing up my portfolio I might as well get a blog post of out it 😉

Deep dive into the portfolio

I usually look at our investments once a month. This is probably too much, and doing so once or twice a year would almost certainly be fine. But I kind of enjoy it, so once a month it is.

I take an hour or so, log into all our accounts, and update my very simple spreadsheet. It’s a pretty rough, slipshod process, and it basically gives me a general idea of our total net worth. If anything looks unusual I will give it more attention, but most months I am just copying numbers from our accounts to the spreadsheet.

Today I actually went through and looked at all our individual holdings, in my accounts and in my wife’s. We have separate accounts that I manage, and we have different investments in each (my account has more dividend stocks: my wife’s more bonds/REITs). It took a bit longer (maybe 2-3 hours), but I got a much better idea of what is in there and feel it was well worth the time.

Some of our investments are in NISA accounts, some are in iDeCo, and some are in taxable accounts in Japan and overseas. I haven’t gone into which investments are where in this post.

Generally speaking you would want to put the investments you think are going to grow (stocks) in tax-advantaged accounts, and things that are likely to grow less (bonds, REITs) in taxable accounts.

Initial impressions

My main takeaway is that our portfolio is a real mess. We’ve been investing for about fifteen years now, and tend to buy things but not sell them. Because of that we have a whole bunch of investments from years ago that are duplicates, have been superceded by more recent products, or that I have no recollection of buying. There are a few companies in there that I am not quite sure what they do, or why I bought them.

I think that is fine though. It’s probably fairly normal to have various odds and ends after a decade and a half of trial and error.

And this is precisely why I recommend that people start off with small amounts of money and don’t rush in too quickly to invest. You will make mistakes and you will change your mind, and it is better to do so with small amounts of money than with large ones.

We also have far more of our portfolio in emerging markets than I was aware of. I am going to have to think about that and what I want to do about it.

Other than the mess and the overweighting of EM I am fairly happy with the portfolio.

Overall balance

Across all our accounts, we seem to have 62.71% in index funds, 19.27% in US-listed (mostly) dividend paying stocks, 12.54% in cash (mainly due to my wife’s business accounts), and 5.48% in Japan-listed (mostly) dividend paying stocks.

This is probably not a portfolio I would recommend to others. Generally speaking, the best option is to put everything into low-cost, diversified index funds.

We have mostly managed to do that, but I find dividend investing kind of fun so have done that as well.

It is likely that we may have made more money, and it would definitely have taken less time, if we had just put everything into 2-3 mutual funds instead.

Index funds (62.71%)

Here are our index funds. I have included the percentage (this is the percentage they make up of the index funds, not of the overall portfolio).

In the second column, numbers represent ETFs listed in Japan, MF indicates mutual funds, and letter codes indicate ETFs listed abroad.

I was kind of surprised to see that 17.82% of our mutual funds are emerging market stock funds, which means that we are roughly 3x overweight (emerging markets make up around 10% of the global stock market, and we also own them in all the global funds).

I’m not sure if this is a problem. I do believe emerging markets are likely to outperform in the future, as they seem to be priced much lower than the US, for example (and the US makes up more than half of the world economy). I will have to think about this, but I don’t think it is a huge problem that needs to be addressed right now.

US-listed stocks (19.27%)

No surprises here. We have 40 different companies in our portfolio. The larger holdings are not because we bought more of them, but because they grew more. I mainly focused on dividend income (growth) in this part of the portfolio.

Again, the number is the percentage they make up of the US stock part of the portfolio, not the percentage of the total portfolio (but you can divide by 5 if you really want to know that).

Not too much to think about here. I have a rule of thumb that I will not sell any of the dividend stocks, so I only have to think about what I want to buy, not whether I should sell or when I should sell. It makes life much easier and gives the stocks more chances to grow over time (which is what we are looking for). I have tried to choose companies that are likely to continue paying (and growing) dividends in the future. A few duds aside (Santander? HSBC?), I’m pretty happy with this so far.

Japan-listed stocks (5.48%)

Same kind of deal as the US-listed ones: aim for dividends, try to choose good companies.

West Holdings is my absolute superstar here. I have no idea why I bought it, but it is up around 800% so far. They are a renewable energy company, so I’m also happy to be contributing to that sector.

Nissan is probably the disappointment here. I bought it before the Ghosn thing, back when they seemed to be the only Japanese car company with an EV strategy. Still down over 50%.

Cash (12.54%)

We have quite a lot of cash, but I think this serves to balance out our relative lack of bonds. Most of the cash is in my wife’s company accounts (she is a sole proprietor though, so that money is hers at the end of the day). There is also quite a lot in the small-medium business savings scheme, some in Shinsei in a Euro account to make sure I keep Gold status, and some in accounts overseas.

Lessons learned

Nothing huge here. I do hope that people will look at this as an example of a real-world portfolio (warts and all) and not as an example to be imitated. This is not what I would do with our money if I were investing from scratch today, and it is certainly not what I would recommend other people do.

Going forward I should probably consolidate some of the mutual funds/ETFs. They all pretty much do the same thing, so selling them and just buying the eMaxis Slim all-country fund would probably make things easier.

I’m going to continue buying dividend paying stocks, with our eventual goal being to make more than 100,000 yen a month in dividends. This would go a long way to paying our basic expenses, and eventually supplement any pensions we get.

From next year I am considering doing tsumitate NISA for both my wife and me. We’ll have slightly less income as I will be unemployed, and I like the idea of sending money into the future.

Anyway, be sure to check out the portfolio thread in the forum, and post yours if you have some time!