2006 will be the year of investment for my personal finance journey. In the last few years, my net worth improvement is predominantly driven by savings from hard-earned money. Moving ahead, more and more should (and hopefully will) come from investment gains. Consequently, more of my posts will be around investment management.
As a starter, I am sharing my portfolio at the end of 2005. A couple of notes before you start reading:
- Size of the portfolio is less than what I reported as net worth. I don't count employee stock options, which I don't think I have an effective management strategy other than "vest and hold". Also, I don't count my net worth currently denominated in CNY (Chinese Yuan) -- the CNY-part is mostly in cash/money market accounts. Until I cleared up my mind with regard to foreign exchange risk management, I will not consider that as an integral part of my portfolio.
- Cash: 41% of the portfolio is still in cash and equivalents. Many of you still remember we sold our house before our relocation in October, and ended up with loads of cash. At the end of October, our cash position was more than 80% of our portfolio, and we had made quite a few mutual fund/stock purchases since then. The goal is 10% for now.
- Mutual Fund: The positions with an asterisk are in our 401(k)s -- our mutual 401(k) plan has a list of (arguably) good funds. We also supplement that with more international and domestic large caps funds in after-tax accounts. I intend to keep 60% of our portfolio in mutual funds.
- Stocks: I will keep no more than 30% of my portfolio in individual stocks and keep no more than 10 such positions. All positions over $4,000 were established in the last two months ... you can clearly see I have an appetitie for high yielding blue chips recently.
Now I open up my portfolio for your feedback. More posts to discuss certain components of the portfolio will certainly follow.