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Jonathan’s Portfolio

I HAVE AROUND 70% of my portfolio in stocks, with the balance in bonds and other interest-generating investments. This seems like a reasonable amount of risk for a semi-retired 59-year-old to take.

The bulk of my bond portfolio is split between a short-term government bond fund and a short-term inflation-indexed bond fund. Given today’s tiny bond yields, I view bonds not as a source of income, but as a place to go for cash if the stock market is suffering one of its periodic downturns. My general approach: Play it safe with bonds and take risk with my stocks.

In calculating my allocation to bonds, I include the private mortgage I wrote for my daughter. You can learn more about that in the chapter devoted to borrowing. If I excluded the private mortgage, my allocation would be more like 80% stocks and 20% bonds.

How is my stock portfolio invested? I have everything in index funds, with that money divided roughly 50-50 between U.S. and foreign stocks. My various Roth accounts, which I hope to bequeath to my kids, are all invested in the same fund—a total world stock index fund.

What about my traditional IRA? In that account, the U.S. stock portion is split between a total stock market index fund, which gives me broad market exposure, and index funds that focus on large-company and small-company value stocks. Meanwhile, for my core foreign exposure, I own an international total market index fund, with smaller stakes in international value stocks, international small-company stocks and emerging markets.

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