I don’t think there’s an exact mix but I’ve read a number of sources that suggest a basic portfolio of 2 x ETFs plus 3-5 individual stocks gives a reasonable diversified starter mix (choosing individual stocks from different sectors as you mention). Maybe also adding a bond and a commodity for spread. Double up if that’s what feels right for you.
There are other factors that you might want to consider. Whether you are going for long term growth or dividends for instance. A younger person has time for growth stocks to develop. An older person may want to move to ETFs paying a regular dividend. Also, element of risk may be something you might want to consider when thinking of percentages invested in each.
As someone in their early 50s I have around 10 to 15years to retirement so some time to tweak the balance and let it grow. That’s why I’m looking at a 50/50 split between the dividend ETFs and the reinvesting ones.
I may look at the split between the ETFs and the separate shares.
Not now but soon, if there is a crash or correction you might struggle to recover your funds before retirement.
If this money is extra to your pension then equities aren’t likely to be a problem but while they’re the most profit asset class they’re also volatile. Traditional advice would be to explore some safer options like government or corporate bonds - they don’t grow as much but don’t drop much either.
I’m not sure how you manage your pension but it might be worth speaking to an IFA or your pension provider as you should be looking to derisk your portfolio sooner rather than later for the same reason I mentioned earlier. If the market tanks and you’re retirement is fixed you could be left with a much smaller lump sum to live in forever!
When I read up on this, I have forgotten where, what stuck with me was “consider the level or risk you are willing to take on.” ETFs can be a safer bet than independent stocks but then if you’re investing in the likes of Apple and Google and such then I guess for now you’re safe. I think the balance should mirror your thinking in how much you are prepared to potentially lose… my tuppence.
In terms of dividend or reinvesting ETFs… personally I don’t take the dividends out,… I just hold that and buy more… but that’s because I do not need to do anything with this at this time. I prefer it to just stack up, you could argue then that I should not be looking at dividend stocks at all… But I have them for “reasons” being that I might need that cash and it’s there when I need it without compromising my portfolio.
In any case, the question still stands. How should you balance your shares, you should do it based on your current life situation and how much you are willing to gain/lose.
Same - The dividend paying ones are for if I might want to withdraw some cash, or if I choose to reinvest - it’s my choice at any given point (assuming some dividends get paid!)
The accumulating ones are to sit and (hopefully) grow.
I’m sticking with domestic UK based ones at the moment and so far looking ok overall, but definitely playing a long game over several years.
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