My investment strategy & portfolio

My Investment Strategy & Portfolio

Today I would like to share my investment strategy with you. I’ve started investing one year ago after reading a lot of blogs and watching a lot of video’s on the best ways to invest your money. What I’ve found out is that an investment strategy doesn’t have to be difficult or time-consuming. You just have to make sure that you have a well-diversified portfolio, so you can limit the risks. You also have to invest in the long term, so you don’t have to panic when the stock market is facing a bear market. That’s why I want to keep my investments for at least 25 years.

That said, my investment strategy to reach financial independence and early retirement is fairly simple and is based on two assets: savings & index funds. However, currently I’m also into mutual funds and even cryptocurrencies. I will explain everything down below.

Savings

I’ve started my FIRE journey this year, so I’ve just really started saving money a few months ago. The reason why this is so important for my investment strategy is that I want to have a emergency fund for emergency situations. When I lose my job for example, I want to have a cash reserve of at least €10,000 that I can use immediately. This way I can leave my other investments alone, so I don’t have to sell index funds when they are at a low price. I can also use bonds for this, but I will come back on this later. 

Currently my money that I’ve saved is just on my checking account, because at my bank you will get an interest rate of 0,15% on the first €5,000. This is the same interest as if I would open a savings account on this bank. However, when I reach this €5,000 milestone I will open an online savings account at Leaseplan Bank, because they offer an interest rate of 0,35%. This is a completely free of charge savings account, the interest is paid every month and I can withdraw my money at any time. So I will keep you guys posted when I’m switching. Since the interest rates are still droping in The Netherlands, the situation might change.

Index funds & mutual funds

This is the core of my investment strategy. Currently, all my investments (besides the savings) are going to index funds. However, when I started investing one year ago I started investing in actively managed mutual funds via Fitvermogen. Fitvermogen offers low-cost mutual funds and I was pretty happy with it. However, I found out that actively managed funds hardly or not at all outperform the passively managed index funds, but they do have much higher costs. That’s why I have started investing in index funds via DeGiro.

In the upcoming months I will transfer all my investments from the mutual funds to the index funds. So that’s why my investment strategy is now primarily based on index funds. 

Index funds are the most cost-efficient way to invest in stocks and bonds. I’m investing in index funds through DeGiro because this is the cheapest broker available in The Netherlands that I know. 

Regarding the index funds, I’m currently investing for 100% in Vanguard FTSE All-World UCITS ETF (VWRL). After doing a lot of research the last couple of months I think this is one of the best index funds to invest in. It’s a widely spread index fund and because it’s in the core selection of DeGiro I can investment once per month without transaction costs. So this is the cheapest way to invest in an index fund for me. VWRL has stocks in companies all over the world, with a focus on companies of the USA. Think of Apple, Microsoft and Amazon.

As you can see I’m currently only investing in stocks and not in bonds. This is because I’m also keeping money apart every month for savings. I first want to reach the €10,000 emergency fund on my savings account and after that, I would like to invest in bonds too. My strategy would be 80% stocks and 20% bonds. This would give my index fund portfolio more stability and security.

An interesting index fund for bonds would be iShares Euro Aggregate Bond UCITS ETF (IEAG). This fund tracks an index consisting of investment-grade government bonds, semi-government bonds and corporate bonds. So I think this is a good and easy way to invest in bonds.

Cryptocurrencies

Yes, I too started investing in the bitcoin last year. It started off so well with huge profits, but now the bitcoin is not doing well. Fortunately, I had invested only a very small amount and I saw this money more like play money. I therefore don’t think that I’m going to make a profit on this, although it may change in the coming years. I do not advise you to invest in cryptocurrencies. Nevertheless, I would like to have reported it here anyway.

My investment portfolio

My current investment portfolio split looks like this:

  • Savings: 40%
  • Mutual funds: 49% (80% stocks, 10% bonds)
  • Index funds: 10% (100% stocks: Vanguard FTSE All-World UCITS ETF)
  • Cryptocurrencies: 1%

As you can see the biggest amount of my investment portfolio is in mutual funds. Like I said, in the upcoming months all the investments in the mutual funds will be transferred to the index funds. I hope to finish this process in 6 months. Besides that, I want to save money as well, until I reach the €10,000. After that, I will stop saving money and this amount of money will go to the index funds. I will start investing in bonds after that for more stability and security in my index funds.

If you want to know more about the amount that I’m investing every month I advice you to read my monthly reports that I will make. In this report I will share all the monthly incomes and expenses, including the investments. For now, I want to thank you for your time. I hope you have found this interesting. If you have any questions, let me know down below!

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