2016 Portfolio Allocations

2016 Income Asset Allocations

Portfolio Allocations

This is the final 2016 overview and today we will take a bit more of a helicopter view of the portfolio. The data behind the Cheesy Index is obviously based on net worth. Our network consists of three types of assets:

  • Income producing assets (by dividend, cash flow or capital gains)
  • assets that do not produce any income (cash, our home, certain belongings)
  • Depreciating assets (i.e. our car)

If you add the value up for all these assets you get your net worth, when you then divide each category by this net worth value you get some idea how well your net worth is working for you. Ideally you want to have your income assets as high as possible, limit your non-income assets and have no depreciating assets (when possible). Our asset allocation for 2016 looked like this:

We are actually pretty pleased that we are now above 80% with our income producing assets. The ultimate goal is to have this exceed 90%, perhaps even get to 95%. For this we would have to rent our own home and find some small rental for ourselves or a very cheap property (perhaps abroad?).

Income Producing Assets

The income producing assets are obviously also able to be distributed into various sub-categories. For us these include:

  • Our real estate;
  • The dividend shares;
  • Our Index funds; and finally,
  • The various Crowdfunding loans.

Looking at the above graph you can see that we are heavy on real estate and dividend paying companies. Which we are ok with, but we are considering two options:

  • From now on adding only new capital to index funds and dividend share; or,
  • Cashing in on the Index Funds and/or some dividend share and purchase more real estate.

The first option is pretty straight forward, income from work and rentals is use to purchase more individual share and ETF’s. This would diversify our portfolio and also improve liquidity (i.e. we can get to money faster). Considering cost averaging, this could be a nice way to get to FI in the coming years.

The second option is interesting because you can use leverage of a mortgage or loan to increase your number of rentals and get relatively high yields. But this would also mean more management and some head-aches with related to issues that need fixing and/or high bills from contractors (which is not helping cash-flow). Considering we would like to be location independent at some point (with potentially periods of long-term stays abroad), real estate is doable, but dividend shares and ETF’s are definitely preferred options for us.


We have not decided what to do at this time and are considering various scenarios. What are your ideas about our portfolio? Which one has got your preference from the above two options?

Oh, and crowd funding will be brought down in both scenarios, as noted here earlier. This money will be reinvested as it comes available in the next few years. Fortunately it’s only a minor portion of the portfolio.

How is your portfolio allocated? Are you happy with it?

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  1. Hey CF, I can understand where you’re coming from. If I were in your shoes, I’d be questioning how much time I’d want to be putting into managing more properties – I wouldn’t want to to take on too much work, that wouldn’t seem very ‘retired’ to me. Plus – do you really want to be taking on a lot more debt at this point?

    The shares/index investing is much more scalable so I’d go for that one 🙂


    1. Hey Tristan,
      but real estate is so much fun! Scouting, comparisons, negotiations, etc. We really like it, and the work is manageable at the end of the day.
      The debt is not so much an issue, as it’s covered by sufficient cash-flow. The leverage is actually what makes this so interesting.
      It’s not an easy decision for us.

  2. Being real estate invested doesn’t need to be a significant risk to mobility. The question becomes, how? Some key parts to a strategy would be, less risk exposure, which can be controlled through the number of type of properties you are responsible for.

    1. No, you are right, it should not. But we have noticed that it affects us more than we thought. You want to have the rental units do well and be as profitable as possible. Having to hire out all the work does not feel right, maybe we get used to this…..

  3. Hmm, I think this is a thought choice. Trying not to repeat anything that has been said above already, stocks/funds have the disadvantage that in a crisis your portfolio will halve. I’m not saying there is one about to come but they do come every now and then if you have a long term mindset. Real estate has the advantage of not being marked to market so you will not face such a decline and subsequent recovery in real time.
    Maybe a combination of your two choices could be real estate companies? There are plenty listed and there are also nice real estate ETFs.
    I am looking forward to read about your choices in the future.

    1. Hey DIB,
      We are continuously developing our investment skills and knowledge. As our preferences develop and knowledge increases, I think our investments will remain subject to change for the foreseeable future. There are pros and cons for every investment option, being very will diversified may just be the right thing to do. Who knows?!

    1. Now that would be difficult. Renters are very well protected in this country, so would have to wait for them to move out. That could take years! Which is a good and a bad thing at the same time…..
      In the mean time we have decided to at least start expanding the dividend and index fund allocations. Still prefer dividend stock over index funds, for cashflow reasons.

  4. I’ve had similar experience as others.Investing in real estate has not really been an option for me for several reasons. I like to invest in individual stocks and will start with some index funds soon. All the best for the future.

  5. Years ago I considered real estate and decided against it for various reasons. It would put a too large number of my eggs in one basket, and I did not want the headaches that come with managing it. That management could be outsourced, but that would have eaten away a large section of the returns. Furthermore, real estate would limited my mobility.

    I chose ‘regular’ investments instead. And that is a choice that I am still very happy with.

    1. Definitely agree on the management and mobility, but not on necessarily on diversity. We have 5 rental units, that is already a pretty decent spreading of risk. That being said, we certainly see the pros and cons for the various investment options. That is also why we have pretty much all of them 😉

  6. Really nice overview to see where the money is and how it is divided over the different types of investment! I might also create a view like this, but also would add my savings… otherwise is would be only bars with 100% for crowdfunding. Real estate and stocks are not yet in the portfolio…

    1. It’s probably a good idea to just write down once where are you money is. Gives a sense of how much of it is actually working for you. In you case, it still would be one bar with 100% crowdfunding for the income produring assets 🙂

  7. Nice idea to visually represent the different categories.
    When location independence is important, you will need a local team to run the rentals. You can get inspired by afford anything. She does that.

    In order to diversify the assets and income, going the stock route is better. This is off course biased by my view on rental property…

    1. Technically we already do have a team, as we have a property managers that do all the financial things (and it helps us tax wise too!). They would also manage the technical side of things when we are not there. It’s just that this is quite expensive. Long term maintenance is usually something that you have to do yourself (or at least arrange yourself).
      This is also why we are debating the real estate for the long term, perhaps stock would be more practical. But for the next 15 years or so, being location independent does not really apply as Miss CF will have to go to school mandatorily.

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