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Our long term (10+ year) investment portfolio

2022-1-2, Michael Thompson

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Our long term (10+ year) investment portfolio

In this article, we provide example portfolios, updated at least once per year. These are aimed at investors planning to save for at least 10 more years, and may be too risky for someone needing their money back sooner. We've kept prior portfolios below for reference. For other example portfolios, see our portfolio pages.

The portfolio may be updated periodically based on market movements and general economics. Between updates, we will revise our allocations if extreme price changes occur. For example, if something declines to a more attractive price, we may rebalance to hold a larger percentage of that asset.

Although our portfolios have returned roughly 30% per year, future expectations should be much lower. Past performance is not a guarantee of future performance. For example, past equity returns benefited from market values growing faster than earnings. This should reverse before 2023.

January 2, 2022 Update

Our 2021 portfolio (further below on this page) returned 23.5% for the calendar year, slightly below the overall US stock market. It was boosted by VBR, VNQ, GSG, Bitcoin and Ether, but pulled down by our bond and gold holdings (BND, BNDX and IAU).

We expect a significantly lower overall return in 2022. High stock valuations combined with low, increasing interest rates should make this a tough year for investing.

We are increasing our equity holdings slightly, with more of a tilt towards value, small-cap and international businesses. We’ve reduced our bond holdings, but may increase them later in the year, pending interest rate moves.

Notably, we’ve eliminated our IAU (gold) position, but increased our position in the commodity fund GSG which includes gold, among other things.

Table 0 - Target asset allocation as of January 2, 2022

FundAllocation [%]DescriptionComment
VTI25Total US stock market index
VXUS25Ex-US stock market index
AVUV7US small cap value stocks
AVDV6ex-US small cap value stocks
BND5US bond market
BNDX5Ex-US bond market
BTC4BitcoinHigh risk
VNQ6Real estate
ETH1EtherHigh risk
-9Individual stock picksWe may provide a list of these in the future

January 10, 2021 Update Notes

For 2021 we've decided to completely remove S&P 500 index funds for the first time. This was often our largest holding, but high valuations relative to smaller cap and international stocks steered us away.

Table 1 - Target asset allocation as of 2021-1-10

FundAllocation [%]DescriptionComment
VTI20Total US stock market index
VXUS20Ex-US stock market index
VBR10US small cap value stocks
BND10US bond market
BNDX10Ex-US bond market
BTC5BitcoinHigh risk
VNQ5Real estate
ETH1EtherHigh risk
-10Individual stock picksWe may provide a list of these in the future

March 18, 2020 Update Notes

In our prior (July 2019) update we told you that experts warned of a greater than 50% chance of recession (two consecutive quarters of reduced GDP) before the end of 2020. Of course, that wasn't accounting for the coronavirus that is now crippling our economy and dominating our news. Recession may be inevitable now, but equity valuations have already accounted for this to a large degree. The virus is expected to significantly reduce economic activity for at least 3 more months and government actions may be critical to get through this smoothly. There is currently significant uncertainty about what governments will do and even then, what the results would be. Experts are not yet sure how reinfection with COVID-19 will turn out or when a vaccine will be available - there's a possibility we'll have to repeat this exercise again this winter. This being said, we are increasing our stock holdings, but not to the extent we would with a clearer COVID-19 future. We want to reiterate now more than ever: this allocation is too dangerous for someone needing access to their funds within the next few years!

Table 2 - Target asset allocation as of 2020-3-18

FundAllocation [%]DescriptionComment
VOO20S&P 500
VWO15Emerging markets
VEU15International markets
TLT820+ year treasury bonds
VTIP8Inflation-protected treasury bonds
VGT7Vanguard Info TechnologyVGT and VOO include significant overlap
VNQ6Real estate
BRK.B5Berkshire Hathaway
VGIT4Intermediate-term treasury bonds
BTC1BitcoinVery high risk

July 24, 2019 Update Notes

We are updating our portfolio due to the increasing chance of recession expressed by several sources. Many sources are predicting a greater than 50% chance of recession before the end of 2020. They’ve increased these chances due to the sustained yield curve inversion, continued trade uncertainty and lower expectations on economic growth. We gradually adapt our positions to the climate rather than try to accurately time the markets.

Our new target allocations are shown in the following table. We still aim to keep 20% of our holdings in the S&P 500 index fund VOO, but we’ve shifted holdings from QQQ and VGT to foreign stocks and emerging markets with lower P/E ratios (eliminating our QQQ holdings completely). We’ve increased gold (IAU) holdings from 5 to 7%. We’d already eliminated our small Ethereum holding when the market cap far exceeded what we felt was a reasonable value.

Table 3 - Target asset allocation as of 2019-7-24

FundAllocation [%]DescriptionComment
VOO20S&P 500
VWO15Emerging markets
VEU12International markets
TLT920+ year treasury bonds
VGIT10Intermediate-term treasury bonds
VTIP10Inflation-protected treasury bonds
VGT5Vanguard Info TechnologyVGT and VOO include significant overlap
VNQ6Real estate
BTC1BitcoinVery high risk

Table 4 - Asset allocation as of 2018-10-13

FundAllocation [%]DescriptionCommentMax share cost [$]*
VOO20S&P 500262
VWO11Emerging markets44
VEU10International markets55
TLT1020+ year treasury bonds125
VGIT10Intermediate-term treasury bonds24
VTIP10Inflation-protected treasury bonds49
VGT7Vanguard Info TechnologyVGT,QQQ,VOO include significant overlap200
QQQ5Nasdaq 100VGT,QQQ,VOO include significant overlap182
VNQ5Real estate85
ETH1EthereumV. high risk190
BTC1BitcoinV. high risk4400

* we don't recommend buying above this cost per share (as of Jan 2019)

Table 5 - Asset allocation as of 2018-2-10

FundAllocation [%]DescriptionComment
VOO35S&P 500
QQQ20Nasdaq 100QQQ and VOO include significant overlap
TLT1020+ year treasury bonds
VGIT7Intermediate-term treasury bonds
VTIP6Inflation-protected treasury bonds
VXUS5International stock
VNQ5Real estate
BTC2BitcoinV. high risk

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Comments / Feedback

invman Feb. 5, 2021, 3:58 p.m.
Thanks, love the portfolios. I must say your 2021 Bitcoin allocation seems excessive. That's a lot of risk dude!

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