It is time, yet again, for the monthly airing of my private financial laundry. I hope that this journal of savings will provide us all enhanced motivation to save. It will also serve as a record, so that I can look back and analyze to see where I can improve.
All of the prior updates in this series are available on the Savings Diary page. The first, I’m Just Saving…Personal Finance Diary kind of provides the “origins story.”
Last Month
In February, I continued to ride the market and my sort of “baseline” of automated savings to increase the overall stash. I ended February at ~$194,000.
As discussed recently on my blog, I try to use the revelations of behavioral finance/psychology to structure my financial affairs. See I’ll Have What He’s Having – Behavioral Personal Finance.
I automate my saving and spending as much as possible. This is especially true for the big items. See, The Automatic Millionaire. As a result, I know that I contribute a little over $3,000 per month to new investments as my “baseline” of automatic contributions to 401(k)s and the like.
Current Portfolio
I remain “overweight” foreign stocks. See Media Pin of the Week – More GMO, Weekly Media Pin – Grantham on Graham, Best Foreign Value Factor ETFs, Resource Roundup: More CAPE, and Foreign Value Factor ETFs Update.
I just looked and it is actually not a super high allocation: about 40% of my overall portfolio. But that is higher than most and certainly more than it would be if I were 100% in VTI.
I run a little systematic, trend strategy with around a quarter of my portfolio. One tiny account uses the yield curve as a signal. That strategy flipped to 100% cash/treasuries in March. Referring to it as a “trend strategy” is probably a bit grandiose. Basically, if the yield curve inverts (based on 3 month t-bills vs. 10yr notes), the market is expensive, and in a downtrend, I am out (with that account). This is sort of more of a hobby/experiment than anything else.
The larger portion of my systematic/trend allocation is just based on valuation and trend and it is long stocks as of the writing of the post. This is vast majority of the 25%. I basically wouldn’t try any of this if I incurred transaction fees or taxes in these accounts.
Most of my investments are indexed but I do allocate based on valuations, within some written guidelines in my personal investment statement. So right now I’m not maxed out on the allocation to U.S. stocks. This is why international stocks are having a larger impact on my portfolio despite being only about 40%. They are making up a larger percentage of the equity allocation and the other stuff (mostly bonds and bills) does not move around as much.
Only about 5% of my portfolio is allocated to individual stocks that I am actively selecting. With all of my investments, I make sure to focus on costs (including both taxes and fees). I see that as the big, almost guaranteed, advantage of indexing.
This Month
In March, the S&P 500 was up about 1.8%, with emerging markets stocks up about 2% and foreign developed (EAFE) up about .80%.
My baseline savings rate is tweaked from month to month. I use some other sort of mental accounting tricks to save more and some months I really do quite well on that. In March I saved about $2,000. I ended up having to spend a couple of thousand dollars on an unexpected medical bill for the little one. Thankfully, it was nothing too serious.
The market increases combined with my new savings to put me at a little over $198,000. So my portfolio grew about 1% and I saved the rest. I
Onward
To sum up, I saved a little bit more $$$ in March and my investments, while not moving a lot, we responsible for an equal contribution to the portfolio growth. My underweight to U.S. stocks continues to be a moderate drag. Guess I will have to wait at least another month to see if I can cross the next round number.