mappleluna – portfolio and monetary flows

[mappleluna]

Hello,

So, I just spent some time putting everything back on track regarding the financial flows and the different portfolios that we have and/or that we want to open.

 

It gives this

Some context on these flows

• The amounts in clear are the amounts that I intend to allocate monthly to the various items.
• The positions are
  • A long-term personal portfolio powered by
    • part of my salary
    • the rent of an apartment that I own
  • A joint long-term portfolio, the planned composition of which I will detail below.
    • This portfolio will be fed monthly up to 5k by our salaries
  • A short term portfolio composed of 100% shares to acquire trading skills and if successful then feed the long term portfolio.
    • This portfolio will be funded with 200 balls every month (this amount will be reviewed based on my successes/failures with this portfolio and active trading...)
  • Monthly savings to build up the capital needed to purchase our future home in the south of France. (the capital of 25% of the purchase price is already almost completely built up) and once acquired this allocated sum will be used to repay the mortgage (hoping to reduce this sum since the house should be rented while we wait to occupy it)

Already on the overall scheme, this little work allowed me to put down certain ideas and suddenly clarified them! It also has the merit of raising questions and points to put in place.

• I need to set up automatic transfers
• The common long term and short term portfolios will both be open at IBKR, is it possible to "logically" separate these 2 portfolios? Does anyone have experience with this topic?

Then, at the level of the composition of the portfolios in decreasing order of volume

• Long term common
  • 45% Actions
    • Energy
      • 4% Total in €
    • Industry
      • 5% 3M in USD
    • Defensive consumption
      • 5% Nestle in CHF
      • 3% Carrefour in €
    • Finance
      • 4% AXA in €
    • Health
      • 4% Bayer in €
    • Techno
      • 4% Amazon in USD
      • 2% Alphabet in USD
      • 2% Facebook to USD
      • 3% Cisco in USD
    • Telecom
      • 5% AT&T in USD
    • Service
      • 4% Red Electrica in €

• • 20% Bonds
    • US corporate bond ETF
      • 10% iShares AAA – A rated corporate bond ETF
    • EUROPE corporate bond ETF
      • ????
  • 6% REIT
    • Real Estate Europe
      • 3% Unibail Rodamco in €
    • US Real Estate
      • 3% Simon property
  • 4% SCPI
    • 4% Corum in €
  • 25% Index ETFs
    • Europe Index???
    • USA index???
    • World Index???
    • Technology index???
    • Small-cap index???
    • Emerging index???

 

• Long term personal
  • I don't know yet, for the moment this one is composed of 100% actions with a bit of everything and anything...
  • Should I align this portfolio with the composition of the common long-term portfolio? Or should I try to play it more offensive and diversify further into stocks?

 

• Short term
  • Aiming to trade CFDs only at first, so depending on the market wind. Essentially a working portfolio (I hope).

 

I remind you that I have never done this kind of investment exercise so I am interested in your opinions! Especially on the long-term portfolio in which I will probably start investing in May or before. I have big doubts about the stocks, I have stolen a few ideas here and there without really doing any fundamental analysis (I don't have the skills)... And then there are still many "gaps" in this portfolio, in particular the index ETFs in which I have not yet dived.

Am I completely wrong or does it hold up? If I put down the first 5k next month, how do I go about it? Do I sprinkle a little on all the titles (not great for the costs...) or do I go all out on one specific title only? Thanks for your opinions!!!! And have a good evening

[Jerome]

Hello

First of all, congratulations, I see that you have thought out your approach very well, in a global way. I am quite impressed by the amount that you can invest. It must be said that with two people it speeds things up considerably. It's cool that your wife is also up for it.

What I also find interesting is that we can clearly see that the short term – trading portfolio is like a sandbox, with smaller amounts, and that it allows you to do your own experiments.

I also sometimes do this when I test certain strategies, the only difference is that I consider it in my overall portfolio, allocating a small slice to it. But basically it's exactly the same.

Regarding IBKR, I don't think it's possible to split across multiple portfolios, but I've never really tried to do it. Personally, I use the free FT portfolio, which I find very good. It allows you to do what you plan, create several small portfolios and have the overall results for all your invested assets. The advantage is also that you are not dependent on the portfolio of a financial service provider. You can thus bring together on the same platform the securities that you own in different institutions.

Concerning the choice of actions, without going into detail, you are fully oriented towards big-caps. The share of techno is also important. Is there a reason for these choices?

Regarding bonds, why do you limit yourself to corporates? They are correlated to stocks, so not optimal from a diversification point of view.

I don't see any gold either? Is that intentional?

Regarding the composition of your personal LT portfolio, I would say that what matters is the overall allocation of assets. So try to always have a bit of the same approach, even if it means just filling the gaps in one of your portfolios with another.

To help you choose index ETFs (and more generally on allocation), I invite you to consult my e-book. The same goes for choosing stocks. You will also find information on how to start depending on the size of the capital invested. In any case, you should not sprinkle on several stocks but rather start with an ETF at the beginning.

Finally, and this is a remark that I make very often here: it is useless when you are starting out to make monster plans on the comet and to want to master everything in detail from A to Z. Theory is one thing, practice is another. Start small and simple, concentrate on a single approach, see how it goes, what the results are and how you control the risk. When you feel comfortable, then gradually increase the amounts invested. The complexity will come by itself, as you gain experience and knowledge, and depending on the size of the capital. If you want to master everything from the start, you will certainly have to review your plans later.

[mappleluna]

Hi Jerome,

First of all, congratulations, I see that you have thought out your approach very well, in a global way.

Thanks for your comment, it's been going around and around for a while but now it's finally out.

I have to say that when you're two, things speed up considerably. It's cool that your wife is also up for it.

Obviously with 2 it goes faster, and we clearly have the same desire to enjoy and be masters of our time, no longer having to take orders. In short, we still have crazy fixed costs when I look back with a little hindsight, probably some optimizations to be made in all that but I do not want to do without my car (even if it only goes out once a week) and my motorcycle, or even move to a smaller place.

What I also find interesting is that we can clearly see that the short term – trading portfolio is like a sandbox, with smaller amounts, and that it allows you to do your own experiments.

I got the GO from IBKR yesterday and I attacked gently this morning, I opened 2 CFD positions in "real" on IBKR! To be continued

Regarding IBKR, I don't think it's possible to split across multiple portfolios, but I've never really tried to do it. Personally, I use the free FT portfolio, which I find very good. It allows you to do what you plan, create several small portfolios and have the overall results for all your invested assets. The advantage is also that you are not dependent on the portfolio of a financial service provider. You can thus bring together on the same platform the securities that you own in different institutions.

Can you tell me more please? FT? Gather the titles of several institutions? I'm curious, do you have links to documentation please so that I can read a little?

Regarding the choice of actions, without going into detail, you are fully oriented towards big-caps.

Yes I relied heavily on the list of dividend aristocrats, on this long term portfolio I do not want to take excessive risk (yes I know stocks are risky at the base but I wanted to dilute this with big caps). Would you go more on mid-caps? Is that what you propose with your determining portfolio on which we can register to receive updates?

The share of techno is also important. Is there a reason for these choices?

Hehe I'm an IT boy so I strongly believe in technology... maybe I should tone that down a bit

Regarding bonds, why do you limit yourself to corporates? They are correlated to stocks, so not optimal from a diversification point of view.

In fact, when I see the yield on government bonds… it’s scary! So I said to myself, let’s split the difference and go for AAA to A and I heard that the risk on this type of bond was very low so… (maybe it’s false, I don’t know anything about bonds)

I don't see any gold either? Is that intentional?

In fact I don't really see what the point of such a value on my portfolio is... Reduce the volatility effect? Be a security in case of cataclysm and be able to sell some coins for daily expenses? I still can't understand the point of such a position. But if arguments arise I am ready to review this!

Regarding the composition of your personal LT portfolio, I would say that what matters is the overall allocation of assets. So try to always have a bit of the same approach, even if it means just filling the gaps in one of your portfolios with another.

Well noted

To help you choose index ETFs (and allocation more generally), I invite you to consult my e-book. The same goes for choosing stocks. You will also find information on how to start depending on the size of the capital invested.

Yes, I will order all of that.

In any case, you should not sprinkle it over several stocks, but rather start with an ETF at the beginning.

Yes it's common sense now that you say it ;0)

Finally, and this is a remark that I make very often here: it is useless when you are starting out to make monster plans on the comet and to want to master everything in detail from A to Z. Theory is one thing, practice is another. Start small and simple, concentrate on a single approach, see how it goes, what the results are and how you control the risk. When you feel comfortable, then gradually increase the amounts invested. The complexity will come by itself, as you gain experience and knowledge, and depending on the size of the capital. If you want to master everything from the start, you will certainly have to review your plans later.

I like the policy of small steps. I just wanted to have a big picture before tackling this project of a lifetime.

Thanks for all your comments Jérôme and have a great weekend!

[Jerome]

Yes I relied heavily on the list of dividend aristocrats, on this long term portfolio I do not want to take excessive risk (yes I know stocks are risky at the base but I wanted to dilute this with big caps). Would you go more on mid-caps? Is that what you propose with your determining portfolio on which we can register to receive updates?

Big caps do not necessarily rhyme with safety. It all depends on their fundamentals and the price where you buy. Look at my recent post on General Electric. At the time it was the biggest of the big. Swissair too. In Europe currently it is okay in terms of price on big caps, on the other hand in CH and the USA it is too expensive overall. Smaller companies have more potential. They can be riskier, but not necessarily. In some cases they are even safer than their big sisters. In the determining portfolio I am very much focused on micro caps. If you read the e-book, you will understand why and how to choose them.

In fact, when I see the yield on government bonds… it’s scary! So I said to myself, let’s split the difference and go for AAA to A and I heard that the risk on this type of bond was very low so… (maybe it’s false, I don’t know anything about bonds)

Bonds are a bit like stocks in a way. They offer a coupon, the equivalent of a dividend, and they can lose or gain value. The coupon is only part of the equation. Just because they pay 1% doesn't mean that's all you earn. The performance of long-term US Treasury bonds since the 1980s even makes several stocks look ridiculous. I don't necessarily recommend them right now because rates are very low and the risk is high in the event of an interest rate increase (which is only a matter of time given the current hysterical injection of liquidity by central banks and governments). So aim for shorter-term Treasury bonds instead. Personally, I find that corporate bonds bring nothing to a portfolio because they are correlated to stocks and perform less well than them. The advantage of government bonds is that they are inversely correlated to stocks. It is even the only instrument that has this characteristic. Very useful in terms of diversification. My e-book will also give you more information on this whole subject.

In fact I don't really see what the point of such a value on my portfolio is... Reduce the volatility effect? Be a security in case of cataclysm and be able to sell some coins for daily expenses? I still can't understand the point of such a position. But if arguments arise I am ready to review this!

Yes, that's it. Again diversification, volatility and security. Gold is the only asset that is not correlated at all (neither positively nor negatively) to all other assets. This is very appreciable when everything goes to shit. At the time I was like you, I did not understand the interest of this investment, but various experiences led me to revise my judgment. Today I could not do without it. See also my e-book.

Have a nice weekend!

[Jerome]

I forgot for FT:

https://help.ft.com/faq/portfolio-queries/what-is-the-portfolio-tool/

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