RetireJapan

For those quick, simple questions which don't warrant a whole thread.

Started this in the hope beginner investors can feel more at ease asking what they think are stupid questions, and to keep clutter out of the forum

It's easy to find information / advice about how to balance stocks and bonds in an investment portfolio but I'm interested how to balance index funds and individual stocks within a portfolio. If anyone has any recommended sources to read about this, I'd be grateful. OR maybe, in fact, it isn't very important?

Most indexes do the hard work of diversifying for you.

For example, the All Country fund has around 3,000 individual stocks from all over the world. They also provide a breakdown in their factsheets such as how much % is invested in the US or Japan etc.

You can also see a breakdown in terms of the industry it's invested in as well.

Hence, there is no need for you to diversify if you are happy with this diversification.

There are different funds with different allocations as well. Let's say you don't want to invest in Japanese companies. For that there is a fund which is called Developed Countries except Japan. If you look at the factsheet you can see that none of the japanese companies are listed in that index fund.

I hope this clarifies your question.

Yossarian wrote: ↑Thu Feb 04, 2021 12:49 am It's easy to find information / advice about how to balance stocks and bonds in an investment portfolio but I'm interested how to balance index funds and individual stocks within a portfolio.

I think in practice you would just treat the individual stocks as a different portfolio. So you would have your indexes, and separately, your bets on individual companies? Many people use a small amount of their portfolio to 'gamble' with, by investing in individual stocks, crypto, GME, etc.

RetireJapan wrote: ↑Thu Feb 04, 2021 8:53 am
I think in practice you would just treat the individual stocks as a different portfolio. So you would have your indexes, and separately, your bets on individual companies? Many people use a small amount of their portfolio to 'gamble' with, by investing in individual stocks, crypto, GME, etc.

OK - that makes sense. I've been thinking about 20% of portfolio on large-cap and med-cap stocks and 80% all word index funds.

Individual stocks will be long term plays - I'm not much of a gambler. Going to learn how to due diligence over this year before I start though.

Yossarian wrote: ↑Fri Feb 05, 2021 12:22 am Individual stocks will be long term plays - I'm not much of a gambler.

If that's the case, why don't you just go for an index fund that represents the market?

Picking individual stocks means by definition you will diverge from the market average. For every winner there is a loser, which one will you be?

In the long run we're all dead. That applies to companies too. But society/the market lives on.

adamu wrote: ↑Fri Feb 05, 2021 2:39 am
If that's the case, why don't you just go for an index fund that represents the market?

80% or so of portfolio will be in index funds. 80% isn't decided actually - might be closer to 90%. The remainder I'll put in to individual stocks mostly because I'm interested in it. When I said I'm not much of a gambler, I meant I'm not interested in meme stocks or risky investments and I'm interested in how to do proper DD and choosing wiser investments. Of course it will have more risk than index funds but at 10~20% of my portfolio I'm happy with the risk.

Yossarian wrote: ↑Fri Feb 05, 2021 3:37 am

I see. Unless your allocation gets out of whack enough to force you to have to sell something, you could just handle it by focusing on where you put new contributions.

https://monevator.com/rebalance-with-ne ... -and-cost/

adamu wrote: ↑Fri Feb 05, 2021 4:10 am
https://monevator.com/rebalance-with-ne ... -and-cost/

Thanks for the link - that style of rebalancing makes sense.

would investing in emaxis S&P 500 and emaxis ALL COUNTRY be more or less the same thing? Should I decide on one rather than going 50?50 on those to funds?