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Jonathan’s Portfolio

I HAVE AROUND 66% or 67% 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 57-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 shock absorber for my stock portfolio and 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 also 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 75% stocks and 25% 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. The U.S. 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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