My Investing Portfolio Allocation: You Can’t Beat the Market

black blue and red graph illustration

In this article, we’ll be shifting toward a more personal note and taking a look at my investment decisions. I’m doing this as a way to share some of my thoughts on investing, to satisfy those of you who are curious about my specific buys, and also as a way to track how my investing philosophy will change throughout the years. Here’s my investing portfolio allocation!

We’ll be going over my current outlook on investing, my current portfolio, and my reasoning. This is not intended to be a guide in any way shape or form, only to inform you of my own thoughts on investing, and how I’ve structured my portfolio. And yes, I will be dropping the actual names and tickers of the stocks I hold. Let’s get right into it!

Investing Philosophy

black envelope with cash dollars on marble table; my investing portfolio allocation
My Investing Portfolio Allocation

I’ve been in the market for less than a year, but rely right now on 4 guiding thoughts:

  1. Invest for the long-term
  2. Never sell
  3. A crash is good
  4. Stock-picking is for the pros

Invest for the Long-Term

Keep in mind that I am currently 18 years old so have (relatively) lots of time on my side. I don’t need money in the near future, so all of the money I’m investing is for 20+ years later. There’s a study that shows the relationship between the chance of losing money and your investing time horizon. It revealed that over a 20 year period, you were almost guaranteed to make money. I like playing into those odds.

Investing for the long-term brings me two key benefits.

First of all, I won’t be scared in a down-turn. Since I don’t need the money anytime soon, even if the market crashes, I’ll be able to hold on and (hopefully) make it out in one piece. This is especially true since I’m only managing my own money and don’t have responsibilities to “outside” investors.

Secondly, I can automate it. I don’t care about short-term prices, so I can pseudo-automate my decisions and deposits. This saves me tons of time in thinking about when exactly to buy into the market. The answer: buy whenever you want if you’re investing for 20 years down the line!

Never Sell

Warren Buffett once said, “our Favorite Holding Period Is Forever“.

Earlier in 2020, I started investing in the general stock market, buying shares of SPY. At the time, I owned shares that cost me about $330 USD. I had already HEARD Warren Buffett’s piece of advice but the 2020 election had me rattled. EVERYONE was shouting “political instability! The stock market is going to crash! A contested election is going to cause a downturn! Sell your shares!!!”

Like a fool, I got scared and sold out at $350 in October. In the same month, the stock dipped down to $320, and I thought “hey I made the right choice.” But $320 was as low as it would go (and that was BEFORE the election.) I kept my eye on SPY as the election happened and watched it grow, and grow, and grow. Finally, I realized that I broke Buffett’s rule and had paid the price. I bought back into the market at around $370 and vowed to never sell.

In retrospect, it was silly to have allowed short-term volatility affect my decisions since I did say to myself that I’m investing for the long-term. But I let my emotions get the most of me.

Crash, Market, Crash!

If you’re planning to liquidate your stocks in the near future, then obviously you don’t want the stock market to crash. But for me, that’s the best thing that can happen. Here’s why:

Historically, the stock market has ALWAYS recovered from a crash. This means that if you don’t care about time horizons, a crash equals bargain prices on stocks. Let’s say you own 10 shares of SPY right now for $3800. Let’s also assume that for whatever reason, the stock market crashes and your portfolio plummets to be worth only $500.

You might think to yourself “HOLY CRAP NOO I LOST $3300!!!” at first. But after calming down, you should realize that for ONLY $500, you can literally DOUBLE the amount of shares you had that were worth $3800. You can buy 10 more shares for basically a tenth of the price. Historically speaking, the stock market has always recovered which means that one day, your shares will be worth the same. So take advantage of these prices and load up!

^That’s what I tell myself to remain un-fearful of a stock market crash.

Stock Picking is for the Pros

According to Yahoo Finance, there are over 10,000 hedge funds. Each one of them is a fully established institution and probably runs at least a couple of million dollars. Those are the people that I’m competing with if I try to pick stocks and, I’m not going to lie, that kind of turns me off.

Plus, there is the very real chance that any company can go bankrupt or lose a significant amount of its value. This is true even for companies we think are too big to fail. It happened with Nortel, Blockbuster, and GE and could happen with any company.

The possibility that a big chunk of my savings could be permanently wiped out is not appealing, to say the least. That’s why instead of picking specific stocks, I just buy them all with index funds. As you take a look at my portfolio, keep in mind that I don’t believe in stock-picking and that’s why I hold so many ETFs.

Portfolio Breakdown

I have two trading accounts, personal and TFSA so will break each one down separately.

In my personal account these are the biggest positions I hold and total allocation for each:

  • Vanguard S&P 500 Index ETF (VFV): 43.08%
  • BlackRock Canada iShares S&P/TSX Capped Information Tech Index ETF (XIT): 11.88%
  • BMO Equal Weight US Health Care Hedged to CAD Index ETF (ZUH): 11.64%
  • BlackRock Canada iShares Core S&P 500 Index ETF (XUS): 8.47%
  • Toronto Dominion Bank (TD): 5.7%

This makes up 80% of my portfolio and the other 20% is split amongst random companies that I have a long-term belief in.

As for my TFSA, this is the breakdown:

  • Vanguard S&P 500 Index ETF (VFV): 40.69%
  • BlackRock Canada iShares Core S&P 500 Index ETF (XUS): 29.95%
  • BMO Equal Weight US Health Care Hedged to CAD Index ETF (ZUH): 9.93%
  • BlackRock Canada iShares S&P/TSX Capped Information Tech Index ETF (XIT): 9.74%
  • Facebook (FB): 9.18%

Reasoning for Investment Allocation

You might be looking at this and thinking to yourself “this might be the most boring portfolio I’ve ever seen,” and honestly, me too. But good investing should be boring.

Most of my portfolio is in SPY ETFs which track the 500 biggest companies in America (like VTSAX). Another large chunk is in technology and healthcare. If you ask me why, I won’t have any good reasons other than the fact that I think those two sectors have a lot of potential for future growth. I didn’t do any technical analysis, or check out their EBITDA margins, or breakdown their PE ratio. I just thought to myself “which sectors, if advanced, would make the world a better place?” and tech + healthcare came to mind.

As for my individual stock picks, those are just to keep me from going insane. Like anyone else in the world, I have an ego. And my ego is constantly telling me “YOU CAN DO IT. YOU CAN BEAT THE MARKET.” So just to satisfy my ego, I take a small portion of my money and play around with it. Is it logical? No, absolutely not. But it does keep my inner trading urges at bay, and that makes it worth it.

Recap

There it is! My investing portfolio allocation along with the reasoning that supports it. Undoubtedly, this will change throughout the years as I continually add to my portfolio, but for now, I believe in investing in low-cost index funds that are passively managed.

What does your portfolio allocation look like? Do you agree with my investing philosophy? What do you think about building a lazy portfolio? Where do you see holes in my logic? Let me know in the comments; I’m curious to hear your thoughts!

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Thanks for reading through “My Investing Portfolio Allocation”. If you’re a student and want to learn how to build income opportunities, head over to this post here. For an overview of a new innovative way of investing, check out the coffeehouse investor portfolio! If you want to learn more about me, head over to this link here. Finally, if you want to get exclusive updates and tips, drop your email in the “get updates” box! (might have to scroll up a bit)

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