My passive portfolio

[sairamss]

After years of mixed results at stock picking, I have settled down on this portfolio. I got motivated after reading JL Collin's book. He advocates VTSAX. I have adopted the below: Any comments. Am I doing something that is wrong.
Appreciate your feedback.

VGT - 33%
QQQ - 33%
SMH - 34%.

Thanks
Sai

 

[wanaberetiree]

After years of mixed results at stock picking, I have settled down on this portfolio. I got motivated after reading JL Collin's book. He advocates VTSAX. I have adopted the below: Any comments. Am I doing something that is wrong.
Appreciate your feedback.

VGT - 33%
QQQ - 33%
SMH - 34%.

Thanks
Sai

If you like it - fine.
I think there are some unknowns - your age and your risk tolerance.

Why VGT and SMH? What’s your thinking behind these selections?

As an alternative I’d suggest to consider:

VTI - xxx%
QQQ - yyy%

 

[sairamss]

If you like it - fine.
I think there are some unknowns - your age and your risk tolerance.

Why VGT and SMH? What’s your thinking behind these selections?

As an alternative I’d suggest to consider:

VTI - xxx%
QQQ - yyy%

sorry for missing out on the details. My style is to invest in growth companies. My level of risk tolerance is aggressive. But, I want to spread out my risk. Hence investing in these. VGT and QQQ are Technology oriented. SMH is tilted towards the Semiconductor industry. I looked at the 10-year returns.

VGT - 10-year growth rate is 22% and expense ratio is 0.1%
https://investor.vanguard.com/etf/profile/performance/vgt

QQQ - 10-year growth rate is 21%
https://www.invesco.com/qqq-etf/en/innovation-performance.html

SMH is a newer ETF. 5 year growth is 37%.
https://www.vaneck.com/us/en/investments/semiconductor-etf-smh/

 

[DrRoy]

Your 3 choices are all tech and you have little diversification. I would suggest that you pick one of them for 25% and the rest VTI.

 

[pb4uski]

+1 not diversified enough and too concentrated in tech

 

[Golden sunsets]

Just as stock picking exposes you to uncompensated risk, sector picking will do the same. I have not read JL Collons, but know who he is and I imagine he is index oriented without the tech tilt.

 

[Out-to-Lunch]

Also, I see that you location is San Jose, which leads me to speculate that you may be employed in the tech sector. If so, then having your employment prospects AND your investment prospects tied to one sector is generally advised against.

 

[beernutzbob]

If you read Collins' book and ended up with that portfolio I suggest a reread.

 

[capjak]

I did not look at each fund in detail but

1. You are tilted heavily toward tech
2. Guessing that the three funds selected overlap on several companies (i.e. duplicate)

VTSAX contains all the companies that are in the three index/funds you selected.....plus a lot more....

Tech sector has done very well in the last decade.......have no idea moving forward....so if you are ok losing a large % in any given year/decade/... (50+%) than

I wish you God's speed....

 

[FREE866]

Like others have noted it is an extremely tech heavy portfolio. That doesn't mean it won't do well over time, but just know it isn't really diversified.


Also , forget your age, what is your investment time horizon?


"passive" investing always sounds simple, but truly staying put is challenging; most "passive" investors are not really disciplined and make moves based on emotions. Only you yourself know your investment temperament. In this long bull market what did you do when we went down almost 20% in 2011? or in August of 2015? or in December 2018?March 2020?

 

[SnowballCamper]

The wrong thing is to be very heavily concentrated in one sector.

Have you thought about what you want your asset allocation to be? (% stocks / % bonds)

The beauty of an asset allocation is to hold assets that are uncorrelated. As a result you have the option to rebalance to your specified asset allocation when one asset appreciates more than another. Then the rebalance means that you sell appreciated assets and buy lower priced assets relative to the last rebalance. This is advantageous psychologically, because when the market changes (up or down) there is only one thing to do, rebalance. So no stress about timing, security choices, etc. The one decision you have to make, and stick with, is the asset allocation. Good luck!

 

[UnrealizedPotential]

Without knowing your age and/or investment time horizon it is hard to have an opinion. Just know if a bear market hits, your investments could take a big, big hit.

Remember, stocks do go down as well as up .

 

[VanWinkle]

sorry for missing out on the details. My style is to invest in growth companies. My level of risk tolerance is aggressive. But, I want to spread out my risk. Hence investing in these. VGT and QQQ are Technology oriented. SMH is tilted towards the Semiconductor industry. I looked at the 10-year returns.

VGT - 10-year growth rate is 22% and expense ratio is 0.1%
https://investor.vanguard.com/etf/profile/performance/vgt

QQQ - 10-year growth rate is 21%
https://www.invesco.com/qqq-etf/en/innovation-performance.html

SMH is a newer ETF. 5 year growth is 37%.
https://www.vaneck.com/us/en/investments/semiconductor-etf-smh/

Picking funds based on past returns is not a good method and will likely lead to reduced returns compared to the overall market. JLCollins book is specific and recommends VTSAX at Vanguard for the equity portion of your investments. Very diversified and not betting on past returns or sectors.

Good luck to you,

VW