How I split our portfolio

….or about the allocation of each asset we own. As it is normal, we chose to diversify the portfolio considering risk and return.

Before all that, I will tell you a little about my savings rate (and for the ones that don’t know – it’s how much you put away to savings from your total income). It is NOT even NEAR 50%, nor 40%… In fact it’s low. Around 20%, maybe 25%. I know that the FIRE movement recommends a big savings rate but this is how we live here. We have big expenses, which we considered before any important acquisition, and we do not cut short our lifestyle. We managed to budget every expense we have from the available 75%-80% of the income. If we are lucky in some months we put the extras in savings. I hope that in the future this rate will also increase….my wife does too.

Our savings are divided in multiple parts. Part of them are used as a buffer for our monthly (or indulgences) expenses, part of them we never touch and the last part goes directly to investments (my favorite part).

An extra explanation for our low saving rate (I feel you deserve to know) is that I’ve read multiple books revolving around the idea of money management and the allocated proportions you should have for a healthy finance. The one that appealed the most is “The richest man from Babylon” and following the examples from there I dedicated at least 10% of our income to paying debts. This ‘debt money’ (I love to call it like that) can go to multiple places ( friends, credit card, mortgage, etc.) and, luckily, some months it goes directly to our saving rate (so 35%-40% s.r.).

Income Allocation

There are multiple recommendations (or variants) of this financial split: we have the 50-30-20 rule ( 50% are expenses, 30% are fun expenses – trips, gadgets, etc. and 20% go to savings), some derivation of 50-30-10-10 ( were the 10% goes to debts and 10 % to expenses) and if I remember well, the mentioned book describes the 70-20-10 allocation( where 70% are expenses and pleasantries, 20% debt money and 10% investments and economy).

Based on the principles, you will find a graph with our current allocation of income (close to 24% goes to savings, 70% to expenses and 6,6% are debt money). As I said earlier, everything that remains at the end of the month in the expense category is redirected to savings. The current allocation comes from multiple refinements our budget, we do it once at 3 months, or earlier if we start any new recurrent expense (for example kindergarten).

Risk Profile

What you do when you start to invest ? Maybe, even before researching about investments. I will say calculating your risk profile. There are multiple calculator online, where from your answer deduce if you are moderate, or conservative or want big bucks (right now).

Some of the calculators I used are:

but there are so many more that can be used.

But do they reflect reality? Or are we able to accept the solution presented? Some people do, some don’t. Me, at the start, I was totally agreeing with it. Was so exited that I am moderate and going more on conservative. But did I respected that strategy or the suggested investments? ….No. I’ve started investing in Cryptocurrencys and FOREX. If anyone wonders, I did not loose the money, because I traded both of them and got a nice profit or cushioned the downtrend (I was also extremely lucky, but you will find the stories in their deserved categories)

Portfolio Presentation

At this current moment our portfolio looks like in the image. You will find in this categories the evolution from December 2017 when I started investing in Crypto, to this current moment. I will continue updating the portfolio each 3 months with new allocations.

Allocation by asset
Allocation by risk

I hope you will enjoy this category as much as we do!

Disclaimer: I am not a financial consultant, all the information you find here are my decisions, I taken in that moment, on my own analysis. I am open to any type of discussion about money. If you want to replicate my portfolio take into consideration that it is your money..

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