Index Investing is a great thing to do you when you are starting to invest or you want to have part of your portfolio holding something safe. I wrote safe on quotes because there's nothing safe in the stock market, but certainly index investing has a much lower risk associated than stock picking. I have developed an Index portfolio made of ETF's that mimics the S&P 500, EAFE (Europe, Australasia and Far East) and Emerging Markets (Asia and Latin America) Index s. The ETF s on this portfolios are chosen base on: MER (Fees that the fund charges) Traded Volume (How easy is to trade the ETF) How close it mimics the Index Previous performance The performance shown below for these portfolios are based on an initial onetime contribution on January 2014 and reinvesting the earned dividends without any additional contributions. YTD (year to date) is up to August 30, 2017. US STOCK MARKET TRADED ETF PORTFOLIO VEA 15% IEMG 5% IVV 80% Symbol Name Distribution MER IVV ishares S&P 500 Index (ETF) 80% 0.04% VEA Vanguard MSCI EAFE ETF 15% 0.07% IEMG ishares Core MSCI Emerging Markets ETF 5% 0.14% 0.05%
Top Holdings (Stocks Owned) IVV VEA IEMG Microsoft Corp Nestle SA Tencent Holdings Facebook Inc HSBC Holdings PLC Samsung Electronics Co Amazon.com Inc Novartis AG Alibaba Group Holding Johnson & Johnson Samsung Electronics Co Taiwan Semiconductor Berkshire Hathaway Inc Roche Holding Nasper LTD $16,000 Portfolio Balance $14,000 $12,000 $10,978 $11,007 $8,000 $6,000 $4,000 $2,000 $12,125 $13,716 Year Dividend Yield Amount YTD 1.07% $ 130.00 2016 1.93% $ 213.00 2015 2.32% $ 255.00 2014 2.25% $ 225.00 Total MER paid for holding this portfolio: $28.91
CANADIAN STOCK MARKET TRADED ETF PORTFOLIO (UN-HEDGED) XEF 15% XEC 5% VFV 80% Symbol Name Distribution MER VFV VANGUARD SP 500 INDEX ETF 80% 0.08% XEF ishares CORE MSCI EAFE IMI INDEX ETF 15% 0.22% XEC ishares CORE MSCI EMERGING MKTS IMI ETF 5% 0.26% 0.11% Top Holdings (Stocks Owned) VFV XEF XEC Apple Inc Nestle SA Tencent Holdings Microsoft Corp HSBC Holdings PLC Samsung Electronics Co Alphabet Inc Novartis AG Alibaba Group Holding Facebook Inc Roche Holding Taiwan Semiconductor Amazon.com Toyota Motor Corp Nasper LTD
$18,000 Portfolio Balance $16,000 $14,285 $14,000 $12,017 $12,000 $8,000 $6,000 $4,000 $2,000 $15,174 $15,931 Year Dividend Yield Amount YTD 0.92% $ 140.00 2016 1.48% $ 212.00 2015 2.06% $ 248.00 2014 1.82% $ 182.00 Total MER paid for holding this portfolio: $74.15 CANADIAN STOCK MARKET TRADED ETF PORTFOLIO (CAD-HEDGED) XEF 15% XEC 5% VSP 80%
Symbol Name Distribution MER VSP VANGUARD SP 500 INDEX ETF CAD HEDGED 80% 0.08% XEF ishares CORE MSCI EAFE IMI INDEX ETF 15% 0.22% XEC ishares CORE MSCI EMERGING MKTS IMI ETF 5% 0.26% 0.11% Top Holdings (Stocks Owned) VSP XEF XEC Apple Inc Nestle SA Tencent Holdings Microsoft Corp HSBC Holdings PLC Samsung Electronics Co Alphabet Inc Novartis AG Alibaba Group Holding Facebook Inc Roche Holding Taiwan Semiconductor Amazon.com Toyota Motor Corp Nasper LTD $16,000 $14,000 $12,000 $11,260 $11,552 $12,526 $13,912 $8,000 $6,000 $4,000 $2,000 Year Dividend Yield Amount YTD 0.95% $ 119.00 2016 1.54% $ 178.00 2015 1.88% $ 212.00 2014 1.75% $ 175.00 Total MER paid for holding this portfolio: $74.15
While Index Investing is a low risk investing approach, it also comes with low returns. If you combine an Index Investing Strategy + Stock Picking, you can easily achieve better than market returns, an example of this is the stock Shopify. By splitting the initial contribution in half and putting $5,000 on Shopify on January 2015, you could have achieved 3 times return on that $5,000 portion! $20,000 Balance $17,901 $15,000 $8,308 $5,000 $5,000 As you can see, investing on the right stock will sky rocket your returns! This is not the only stock that have achieved this kind of returns, Amazon, Facebook, Google (Alphabet), Tesla are some of the stocks with these impressive returns. This is the reason why I believe that spending time analyzing stocks with the right approach and tools can be very rewarding and can be done with a full time job/kids/other responsibilities! When stock picking, you can add this stocks to your portfolio, hold them while they sky rocket and sell them afterwards if necessary I will teach you how stock picking works and the process that I follow to find awesome stocks like Shopify, I also will teach you how to have entry and exit strategies because you cannot invest in something if you don t have a plan, and trust me, I ve seen A LOT of investors that ends up losing money and they don t know why. Welcome to our growing community of Investing Loons!