This page lists all of my investments that I have in my investment portfolio. I favor investing in mutual funds, index funds, and ETFs. I have three investment accounts, a brokerage, a Traditional IRA, and a Roth IRA. I recommend investing at least 15% of your income once you have your debt paid off and have an emergency fund of 3-6 months worth of living expenses in place. What follows is the description of the goals of my account and the investments that are within them, and the target portfolio percentage for each investment.
Taxable Brokerage Account:
Strategy: Invest 60-80% into high yielding tax-free bonds and 20-40% into equities (this number may be higher if the market goes down significantly). The goal of this portfolio is to create an average yield of 4% (not counting capital appreciation) using dividends and distributions. Currently, this portfolio surpasses its yield target of 4%. This portfolio currently yields more than 4%.
Because this account is taxable, I have selected dividend funds that are tax efficient. What follows are my investments and my current target for my asset allocation. When it I retire early, I will fund my lifestyle with the dividends and distributions that are paid out to me from the investments in this portfolio. Because I will not have to sell any of my shares in order to fund my lifestyle, this portfolio will never run out of money.
I have chosen SPYD as my domestic equity and IDOG as my international equity. IDOG has a yield of nearly 4% and a low turnover rate. Its low turnover rate makes this fund pretty tax efficient when compared to actively managed international dividend mutual funds. International funds typically are spotty with their returns. In regards to their capital gains, they typically will flat line over the long term; however, international dividend paying companies tend to be more stable and will typically outperform the international market long term. The high dividend yield of IDOG will allow for consistent cash flow, and the foreign investments in this fund helps add diversification to my portfolio. I have chosen SPYD as my equity due to its low volatility (in comparison with the stock market), its high yield, and its low turnover rate.
I chose a high-yield municipal bond fund instead of lower risk municipal bond funds because I am not concerned with my principal. Its high yield is more important than the added risk involved with using high-yield bonds, and the increased risk from this type of bond is balanced out by the lower risk (in relation to the stock market as a whole) of the equity funds I have chosen.
Dividend funds and etfs are typically less tax efficient than low-turnover index funds, but index funds would not allow me to achieve my goal of living off of dividends and interest as easily so I had to sacrifice a little bit of tax efficiency for more income.
This portfolio is mostly funded by my books’ royalties.
1. SPDR® Portfolio S&P 500 High Dividend ETF (SPYD)-20% of portfolio
2. ALPS International Sector Dividend Dogs ETF (IDOG)-20% of portfolio
3. Prudential Muni High Income Fund Class Z (PHIZX)-60% of portfolio
Strategy: Invest 60% into bonds and 40% into equities. This portfolio aims to have a yield of at least 4% (not counting capital appreciation). When I reach retirement age, I will use the dividends from my equities and the interest from my bonds to fund my lifestyle. I will not have to sell any of my investment shares; therefore, this portfolio will never run out of money.
My equity funds are SPYD and SCHD. I am using two funds because SCHD typically favors consumer staples (my favorite sector) and SPYD has a yield of almost 4%. Both funds have good track records. SCHD typically outperforms the S & P 500 index and SPYD is significantly less volatile than SCHD and the market as a whole.
I chose CIBFX as my international equity (although it does keep a good portion of its investment in the US as well). It pays a good dividend and has some international exposure. In comparison to the foreign market, it has outperformed it most years. Unlike the international index funds that are available to me without a trade fee, this one pays a quarterly dividend (the index funds that are available to me without a fee pays only once a year).
I chose PONAX and PHYZX for my bond funds because they both pay high interest. PONAX is a relatively conservative bond fund, and in my opinion, has struck a perfect balance between risk and high yield. PHYZX has a very high yield and is quite a risky fund by bond standards. I use PHYZX to help get my portfolio’s yield up and I use PONAX for its yield and as a stabilizer for my portfolio.
This account was funded by a traditional 401k rollover from a previous employer. I do not plan on adding any additional money to this account. When I reach retirement age, I will do a back door rollover into my Roth IRA. This fund will grow and compound over time due to the dividends and distributions that will be reinvested into the portfolio.
1. SPDR® Portfolio S&P 500 High Dividend ETF (SPYD)-25% of portfolio
2. Schwab Quality Dividend ETF (SCHD)-5% of portfolio
3. American Funds Capital Income Builder® Class F-1 (CIBFX)-5%
4. Matthews Asia Dividend Fund Investor Class (MAPIX)-5% of portfolio
5. PIMCO Income Fund Class D (PONAX)-45% of portfolio
6. Prudential High-Yield Fund Class Z (PHYZX)-15% of portfolio
Strategy: Invest 60-80% into bonds and 20-40% into equities (if the market is down significantly, I may allocate my investment beyond 40% equities). This portfolio is similar to the one I have in my traditional IRA. Like my other two investment portfolios, the goal of this portfolio is to maintain at least a 4% yield from dividends and distributions. Like my other two portfolios, this portfolio’s yield currently surpasses 4%.
The key difference in this portfolio from the one I have in my Roth IRA is the inclusion of DGRW and the smaller allocation percentage of PHYZX. DGRW has a solid track record of dividend growth, and it has outperformed the market almost every year since its inception. SPYD is included for its high yield and low volatility. This helps offset the more aggressive approach that DGRW takes in its investment choices. SCHD rounds out the portfolio with its emphasis on dividend-paying companies that are financially stable.
This portfolio takes significantly less risk in its bond investments than my Traditional IRA’s portfolio does. PHYZX is limited to 5% of the portfolio and PONAX is 55% of the portfolio. PONAX is a pretty conservative investment (but more risky than treasury bonds), and it gives consistent income. PONAX also helps stabilize the portfolio so that it is not as volatile.
This portfolio is funded in part by a rollover that I did from a previous employer (I worked for this employer in my early and mid 20s), and additional contributions that I have made from other income sources since then.
1. SPDR® Portfolio S&P 500 High Dividend ETF (SPYD)-20% of portfolio
2. WisdomTree U.S. Quality Dividend Growth Fund (DGRW)-5% of portfolio
3. Schwab U.S. Dividend Equity ETF (SCHD)-5% of portfolio
4. American Funds Capital Income Builder® Class F-1 (CIBFX) -5% of portfolio
7. Matthews Asia Dividend Fund Investor Class (MAPIX)-5% of portfolio
8. PIMCO Income Fund Class D (PONAX)-55% of portfolio
9. Prudential High-Yield Fund Class Z (PHYZX)-5% of portfolio