Hello again, I hope today’s market decline doesn’t have anyone running for the hills. March hasn’t been the friendliest of months to our investment portfolios but hope is on the horizon. Of course, that’s just my opinion so do be careful out there. We never know when the next full tilt decline may come.

In any case, I wanted to share quickly with you the 5 fund investment portfolio I’ve been using inside my taxable brokerage account. Don’t hesitate to let me know what you think in the comments below.

5 fund investment portfolio

5 Fund Investment Portfolio – Initial Thoughts

Traveling way back to the end of 2023 or the start of 2024 I decided it was time to make some big changes to my portfolio. You may remember a post about this from January titled, “Stock & ETF All-Weather Portfolio”. In that post I laid out every asset I would be holding going forward. However, for this post, I wanted to separate out the holdings that exist in my taxable brokerage account and explain my thought process for this 5 fund investment portfolio.

First, I generally consider myself a dividend investor. True, I do love options, and they will probably always have their place in my portfolio. But over the years, and the many options losses, I’ve learned that dividend investing is much more suitable for me. As such, I decided to construct my IRA portfolio to match that fit. A manageable mix of dividend paying ETF’s and individual stocks that I think will stand strong over time.

Many younger investors say skip the dividends and focus solely on growth. However, I believe the psychological bonus from receiving those dividends can’t truly be calculated. Especially in a bearish market where the losses just keep on coming. Receiving that dividend each period is similar to a dying horse getting a shot of adrenaline. A nice reminder to stay the course. Regardless, with my IRA largely built for income & growth it left me kind of wondering what to do with the money in my taxable brokerage account.

As a result, I made some big changes. One of which was this 5 fund investment portfolio which we’ll unfold now.

Making the Changes – Not as Easy as it Sounds

Changing the account wasn’t all that difficult but it wasn’t quick and that introduced some unwelcome emotions. Waiting on funds to transfer, as it turns out, is quite the trigger to my anxiety. I felt like I was waiting on paint to dry, hoping all would go smoothly. My funds had essentially disappeared from my investment account and all I could do was wait on them to arrive in my bank account. Thankfully, everything turned out fine and I was able to get all my money where I wanted it. Still, it wasn’t the most comfortable thing I’d ever done.

Change # 1 – Withdraw

With my taxable brokerage account largely being my options trading account I had to determine if there was an options play I wanted to be using this money for. Turns out there was but I still didn’t have enough money to make it possible. As a result, I considered just parking the money into several places, T-bill’s, CD’s, Money Market fund’s, etc. All of which were paying a decent return in the neighborhood of 5% thanks to the higher fed rate.

Ultimately however, I elected to withdraw the money and park it in a High Yield Savings Account. Why? Because with all of those other investment products there was still a risk of owning them. Sure the risk may be so tiny it’s not even really worth mentioning but I didn’t want to be in the camp of people finding out that small risk is still risk.

So I transferred out the lions share of that portfolio to put in my HYSA. A little bit lower interest each month but a lot more peace of mind. I liked the trade off and I also like seeing the money grow without the principal value fluctuating.

Change # 2 – What’s Next

With most of my money from this account transferred out I left about $6,000 dollars behind. At first, this was just going to be fun money or money I’d use to create content for my website or Youtube channel. Both of which made sense but after carefully thinking it over, I was experiencing some real burn out. My channel was growing, be it ever so slowly and my site was receiving increased traffic. Using that money to continue growing would have made real sense. However, I was in desperate need of a break.

Youtube isn’t going anywhere and my site is still here so I can pick either up anytime. Therefore, I turned my attention to just investing that money in this 5 fund investment portfolio. Admittedly, the results have been slow and it’s still way to early to tell if the move was smart but it did free up my time so I’ll take that as a win.

Change # 3 – Asset Selection

As I just mentioned, I was tired and wanting a break. Options trading can be emotionally exhausting, add in the content creating and I wanted something truly passive. I wanted something I could blindly DCA into without the need for constant research or analysis. Saying blindly almost scares me but it’s the truth. I needed the break more than I even realized.

I had to ask myself, what is this portfolio going to do and where do I think the market is heading? To the first question, I’m still not sure I have a great answer. To the second, I think the market is due for a correction. It hasn’t happened since the pandemic and even then I felt like there were manipulative forces at play. I guess in a nutshell, I just want the market to go back to being a free market. Whether that day ever comes, who knows.

I ultimately decided that while I was bearish long term, I was actually bullish in the near term. With the election just around the corner I felt moderately confident the market would rise at least until then. That would give me time to decide what I ultimately want to do with this account. It also keeps my money earning interest while I take a break.

In total, I was feeling bullish for the period and I knew I wanted something that didn’t require much effort. As you may have guessed, I landed on ETF’s as my preferred vehicle.

My 5 Fund Investment Portfolio

  1. SGOV – T-Bill ETF
  2. SPLG – S&P 500 ETF
  3. QQQM – Nasdaq 100 ETF
  4. SCHD – Dividend ETF
  5. DGRO – Dividend Growth ETF

As you can see, I didn’t go crazy with some exotic options play or even a new cutting edge investment philosophy. I decided to keep things simple and stick with the proven approach.

Rather than dive all-in out of the gate I opted to take half of the available capital and tuck it into the T-bill ETF so that I could slowly DCA into the remaining four funds. With the goal of eventually contributing everything to those four and completely eliminating the SGOV ETF position. That said, I also wanted to be receiving a return on that money so I stashed it there. Effectively making this a 4 fund investment portfolio that is temporarily a 5 fund portfolio.

Closing Thoughts

All in all I think the portfolio has and will perform satisfactorily. As of this writing the 5 fund portfolio is up $70.74 or 1.4%. Factor in the small amount of dividends I’ve already received and the picture is better but still not great. Currently I’ve received $26.04 in dividends from SGOV alone. The other 4 funds will pay some time this month so the percentage return will look much nicer soon enough.

In total, including the small dividend payment, I’ve returned $96.78 or just shy of 2%. Certainly not bad for the ease of just setting and forgetting. For comparison, had I just put that money into my HYSA I’d have only returned $43.50. By keeping the money invested I was able to, at least currently, achieve another $53 of returns. Sadly though, if I calculate that return against the $20K I stashed in my HYSA I’d be looking at having another $200+ in value during this period.

Either way, I’m happy-ish with the current result. I’ve stashed away a large chunk of money that is ready and waiting for the market to take a dive. Sure, I’m missing any current gains but my capital is largely protected (barring any banking crisis) and I’m ready to pour it in at a much more favorable valuation.

With regard to my 5 fund investment portfolio, I think its a fine fit for a tired content creator. The returns are slow but steady and I can’t argue with a 2% return in just 2 months. Annualized that becomes 12% and I think anyone would live with that.

God bless,

Jeff