My July 2020 Personal Financial Position and Investment Portfolio (with template)
Building wealth takes time and understanding our portfolio is an important exercise for 2 main reasons:
- Evaluate existing portfolio for the need to re-balance
- Plan and strategise for future investments
Quick note: I’ve shared a simple template to keep track of the financial position that you can download at the end of this post.
Re-Balance of Portfolio
Re-balancing of portfolio is an exercise to ensure that our existing portfolio is kept within our risk appetite. As higher risk investments – such as stocks and cryptocurrencies – have the potential to swing up or down drastically, it can easily sway a portfolio to be riskier or safer than desired.
As an example, for a portfolio that is targeted to be 50% cash and 50% high growth stock:
- When market is good and the stocks double in value, the portfolio will shift in value to 33% cash and 66% stock. A re-balancing will be to take some out of the stocks and put into cash so that it reverts to a balance of 50% cash and 50% stock.
- On the other hand, when market is bad and stocks half in value, the portfolio will become 66% cash and 33% stock. Re-balancing may be to inject more into the stock so that it is balanced up again.
Another reason to re-balance the portfolio is due to a change of risk appetite. As we mature, we may have more commitments (e.g. family, growing parents, etc) or gotten a windfall/bonus. Different circumstances may affect the amount of risk we are willing to take on at different times.
Plan & Strategy
By knowing what our current portfolio looks like (i.e. Financial Position), we can effectively plan what else to add on to our portfolio as we generate more income.
We may add new asset classes to our portfolio or just load up on the existing ones. Nevertheless, by knowing our financial position, we can make a more sound decision in terms of investing. For a conservative portfolio, there may be room to venture into riskier asset classes and vice versa.
We may from time to time hear of new investments, such as ETF that is recently being promoted very strongly in Malaysia. But we have to know how is our current financial position or investment portfolio to know if it is a good fit for us at this moment. If it is not, then we can KIV it and come back to it at a later time.
Jason’s Current Financial Position
In this post, I’ll be sharing my current financial position and how I have invested thus far.
I will split this into 2 parts. One with EPF and the other without. The reason for the 2 versions is because, as a salaryman, EPF is a compulsory monthly contribution and do not show any form of investment decision on my end.
The asset values will also be netted off against the relevant liabilities/debt. For example, property investments will be set off against the outstanding mortgage amount. If it is negative (i.e. current market price lower than outstanding mortgage), like in my case, then such an asset will not appear in the pie chart below. But this will lower the financial position as recorded in the Excel sheet template I’ll be sharing at the end of this post.
*I’ll be sharing in % terms given that this is a public post.
Jason’s Financial Position (Total)
In order of size:
- EPF – 57%
- Stocks – 17%
- PRS – 7%
- Mutual Funds – 6%
- Cash – 5%
- Fixed Deposits – 4%
- Vehicles – 3%
- Crypto – 0.3%
- Gold – 0.1%
Jason’s Financial Position (excluding EPF)
In order of size:
- Stocks – 39%
- PRS – 16%
- Mutual Funds – 14%
- Cash – 12%
- Fixed Deposits – 10%
- Vehicles – 8%
- Cyrpto – 0.7%
- Gold – 0.3%
Breakdown
What can I say? I am focused! My portfolio is weighing on the riskier side of things.
Stocks (High Risk) remain my heaviest investment of close to 40%. However, it is further split into 50% in Malaysia and 50% in US. The stocks I invest in typically follows my defensive investment criteria as detailed in my post here. It is high risk merely because it is equity in nature and exposed to a lot of uncertainties. However, I am able to live off the dividends if the prices dropped so I am not worried.
PRS (Private Retirement Scheme) – Equity (High Risk) is mainly to capture the tax relief of maximum RM3,000 per year. I’d suggest everyone to take this opportunity to maximise this amount as it’s only RM250 per month and is a passive investment that will contribute to our retirement fund.
Mutual funds – Equity (High Risk) mainly stems from my days of passive investing many years back. I have a minimal amount that I have invested in StashAway (30% risk index). It is high risk as the funds that I am invested in are higher risk in nature. I am shifting some of these to fixed income portfolio in the coming months to balance out the risks in my portfolio.
Fixed Deposits & Cash (Low Risk) are generally my emergency fund and the pre-investment account where I would gather enough money to be able to invest into assets.
Vehicles (Depreciating Asset) refers mainly to my car that I am driving. This is not an investment vehicle, but it does carries some value if I were to liquidate it as of now.
Cryptocurrencies (High Risk) is something new that I am looking at. I have not really ventured into this yet, but I am starting to look into this further as an alternative investment. I have recently injected a small sum into this to explore.
Commodities (High Risk) Sometime back I started investing in Gold via HelloGold. I am investing into this with dollar cost averaging method.
What’s Missing?
- Property: I have invested in a property that has a negative value after netting off my mortgage. I am holding on to it as it generates rental income for me. There are some golden lessons that I learnt from my first property investment and will post about them in the near future.
- Amanah Saham Fixed Price Fund: I have not looked into this before given my tendency towards riskier assets. However, this is something that I am looking to add into my portfolio in the next few months.
- P2P Financing: I used to have some money invested in P2P offerings. However, I have withdrawn everything now with the default rate rising and my low confidence in the issuance so far.
In Closing
I generally review my portfolio twice a year to “bring balance to the force”. I’ll recommend to at least look at it once a year so as to know how things are developing and ensure we’re not taking on too high/low risks with our money.
How we create our portfolio falls back to our own personal preferences. Some like the excitement in active investing and hence will put more weightage in risky assets. Others like to have capital preservation and hence weigh more into safer investments. There are also those who would like a mix. Another factor that influences the mix is the time we have to put into investments, where an active investor would prefer riskier assets as compared to someone who does dollar cost averaging or passive investing.
My target portfolio up to age 35 will be 50% high risk, 50% low risk assets. I still love the stock market. We shall revisit this again sometime in the future!
Years back, I started with a high risk portfolio comprised of more than 70% in stocks (where half of them are growth stocks with no dividends). At 31 this year, my risk appetite have fallen significantly from before. I work a full time job as a corporate advisor (aka I assist owners to buy/sell businesses and fundraising), which can be quite demanding on my time. I have plans to start a family as well. Thus, I am shifting more towards safe havens and less risky assets such as boring dividend stocks, fixed income / bond funds, etc.
You may also take reference from the investment portfolios of other personal finance bloggers, some of which I follow are:
- MyPF’s Stev Yong: Building a Million Ringgit Portfolio
- Mr-Stingy: How I Invest My Own Money
- Ringgit Oh Ringgit: Breakdown of My (SUPER HIGH RISK) Investment Portfolio
- No Money Lah: How I Invest My Money as a Self-Employed Person
- Marcus Keong: How to Invest My Money As A Full-Time Engineer
Template – Financial Position
I encourage everyone to do a self-assessment of where you stand and work from there.
If you don’t know where and how to start to keep track of your financial position, I’ve created a template here for you to download and use. You can modify this accordingly to fit your style. Have fun and stay balanced!
Note: The amount to input is the amount you will get (or need to pay) if you cash out today – i.e. market value
