After having spent many hours on learning how to trade stocks, I have decided to start passive investing again. As much as I would like to continue buying selected stocks, I simply do not have the energy or the time to analyze each company individually.
Even though I am going to start selling most of my stocks to invest in indexes, I will still allocate a certain percentage of my portfolio to selected stocks. This would put the knowledge I have gained in stocks to good use. Additionally, I believe some of the stocks I have invested in will in time outperform my indexes.
Here is how I am going to distribute my new updated portfolio:
- Canadian Index – 20%
- International Index – 20%
- US Index – 30%
- Selected Stocks – 30%
Investing Locally Through the Canadian Index
When I first started investing in index funds, I had very little interest in the Canadian Index. However, now that I have taken some time to look into it, I have noticed that the Canadian Index focuses heavily on the financial and energy sector.
The Canadian Index allocates a large portion into the big reputable banks in Canada that have consistently performed well year after year when the market isn’t in recession. Furthermore, the energy sector is always in demand and seems to undergo a positive upward trend.
These two sectors have already captured my interest even prior to my research into this index. I definitely see lots of growth potential in these sectors. In fact, my current portfolio already contains a large portion of selected stocks in both the finance and energy sector. The Canadian index will make management of these stocks much easier.
Reaching out to the International Index
Similar to the Canadian Index, I haven’t had much interest in the International Index until now. Just on first glance, the international index is more focused on the consumers. After all, the world economy does include more than just the western countries. I can also see lots of potential in economic growth in Asia and Europe.
Upon doing research, I have come across recommendations to invest a portion of my portfolio into the international market. The more I thought about it, the more it made sense to me. Investing in the International Index will allow my portfolio to reach into international growth.
The US Index (S and P 500)
The US Index was the first index fund I have invested it. It contains many well reputable companies such as Apple, Google, Microsoft, Johnson & Johnson and many more. I am even a loyal consumer of products from these companies.
Unlike the Canadian Index, the US Index allocates more of its funds to the technology and healthcare sector. Having both of these indexes will diversify my portfolio. I am not quite sure why I haven’t thought about this earlier.
Managing my own Selected Stocks
Lastly, despite that this new revamped portfolio will allocate 70% of my balance to indexes, I am dedicating the remaining 30% to selected stocks. This is where I will use the knowledge I have gained in trading stocks to invest into companies I deem to have growth potential.
I will also use this portion of my balance to furthering my knowledge. I have much more to learn about stocks and I plan to do this through further experimentation. When the time comes when I have learned something worthy of sharing, I will do so here at Million Endeavour.
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