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Every so often it pays to go ahead and review your portfolio.

With 2014 over, I spent this week checking up on things to make sure we’re staying on course with our investments.

Since I’m looking at our accounts, I thought it might be helpful to explain our process and strategy.

Index or Actively Managed

For our accounts we prefer to go with passive investing as our overall strategy. (We can’t completely achieve this as my husband’s 401(k) has limited options.)

The biggest difference with index and actively managed funds or ETFs are the goals.

With index, you are simply trying to track whatever benchmark you’ve chosen. Either all or a representative sample of a specific index are purchased. Most of this is automated.

Actively managed’s goal is to beat the market or at least those similarly constructed funds.

A fund manager works with a team to research and try to predict what securities to invest in.

In theory, most people would love to beat the market, but looking at history and the numbers, there are plenty of investors who come out ahead by going the index route.

Two big reasons are:

There are exceptions of course, but most people don’t have the time and resources to make active investing a better option over the long-term.

What We Invest In

For my retirement portfolio, my overall investments is based on the David Swensen‘s model.

He’s Yale University’s Chief Investment Officer and author of Unconventional Success: A Fundamental Approach to Personal Investment.

For personal investors, he recommends a portfolio that includes:

  • Domestic Equity (30%)
  • Real Estate Investment Trusts (20%)
  • Foreign Developed Equity (15%)
  • U.S. Treasury Notes and Bonds (15%)
  • Emerging Market Equity (5%)
  • U.S. Treasury Inflation-Protection Securities (TIPS) (15%)

As you’ve probably figured out, this portfolio’s strength in how diversified it is without having to a ton of securities.

In fact you can construct this portfolio with a handful of index funds or ETFs, making it incredibly easy to track and manage.

  • US Total Stock Market (VTI)
  • Emerging Markets (VWO)
  • REIT Index (VNQ)
  • Total Bond Market (BND)
  • Short-term TIPS (VTIP)
  • FTSE All-World ex-US (VEU)

My husband’s retirement portfolio is similarly diverse.

  • US Total Stock Market (VTI)
  • US Large-Cap Value: VTV
  • US Mid-Cap Value: VOE
  • US Small-Cap Value: VBR
  • Developed Markets: VEA
  • Emerging Markets: VWO
  • US High-Quality Bonds: BND

There are other simple portfolios that you can use for your own investments, just make sure you understand the logic behind it.

Where We Invest

My husband has his IRA stashed away at Betterment.  Basically with them, investing is as easy as depositing money into a savings account. I was able to set up his account in about 20 minutes and it takes even less time to manage.

For my husband who checks his account even less frequently than I do, Betterment is a good fit as it automatically re-balances his portfolio. That helps him to stay on his long-term plan without having to constantly check in.

While no investment company can be everything to everyone, I believe that Betterment can offer an easy solution if you’re someone who wants to your IRA up and running quickly without having to hover.

Check it out and see if could be the right option for you.

I use Vanguard to handle my investments. I love them; they have numerous funds that have low fees, meaning more of your money goes towards growing for your benefit.

Vanguard is known for having great customer service and being a valuable resource when it comes to investing.

Check them out today if this sounds like something you’re interested in.

How We Track Our Investments

Even though we are passively investing, we still want to be on top of our finances. That means we have a system to alert of us of our progress and if anything usual happens.

Right now my tool of choice is Personal Capital.

Besides offering a free portfolio check-up Personal Capital also has wonderfully useful ones that can help you optimize your investments including a 401(k) fee analyzer, asset allocation tool, and the latest – a retirement calculator to see if you’re on track for your goals.

Here’s a thorough review of Personal Capital, but if you want to jump in and optimize your investments, you can sign up for free here.

Thoughts on Your Investment Strategy

I’d love to see how you’ve come up with your investment strategy. How long did it take for you to get it set up?

How often do you manage it? What resources do you recommend on learning more?

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About Elle Martinez

Elle Martinez helps families at Couple Money achieve financial freedom by sharing tips for reducing debt, increase income, and building net worth. Learn how to live on one income and have fun with the second..

2 comments comments closed

  1. Good luck! These days I am more and more skeptical of the opportunities for retail and middle class investors, but I hope that there’s enough opportunity for everybody that we can prosper and see our money grow.

    • Thanks MB! Over the years, this strategy has been working for us – our portfolio has been increasing while we keep tabs on it occasionally.