Our 2025 investment portfolio

2025-1-2, Michael Thompson

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In this article, we provide example portfolios, updated at least once per year. These are aimed at investors planning to save for at least 10 more years, and may be too risky for someone needing their money sooner. We've kept prior portfolios below for reference. For other example portfolios, see our portfolio pages.

The portfolio may be updated periodically based on market movements and general economics. Between updates, we will revise our allocations if extreme price changes occur. For example, if something declines to a more attractive price, we may rebalance to hold a larger percentage of that asset.

Although these portfolios have had some very good returns, future expectations should be lower. Past performance is not a guarantee of future performance. For example, equity returns have benefited from market values growing faster than earnings—something that will unlikely last forever.

January 2, 2025 Update

Our portfolio for 2025 is provided below. Further down, we comment on the results of our 2024 portfolio.

Our 2024 portfolio (below) yielded a total return of 18.2%, well below the 25% return of the S&P 500. Our portfolio returned more than anticipated, but the S&P 500 returned a lot more than anticipated. Since we started this in 2020, we managed to beat the S&P 500 in 3 years (2020, 2022, and 2023) but fell short in 2021 and 2024. When the S&P 500 does well, our diversification outside the US and across asset classes can prevent us from beating it. The idea is that we want to do much better in years the S&P 500 does not do so well.

Our portfolio was once again boosted by the highest risk assets: GBTC and our individual stock picks. We were dragged down again by bonds: BND earned a total return of just 1.38%. It reminds me of an old talk by Warren Buffett: people say bonds are safe, but if safe means not losing purchasing power then perhaps they are the most risky asset over the long haul!

Our portfolio is updated slightly for 2025, shown in the table below. The most notable change is the addition of so-called “altcoins” including Ether, Cardano and Solana. We reduced our Bitcoin allocation from 5 to 3%.

January 1, 2024 Update

Our 2023 portfolio returned 27.9% for the calendar year, slightly above the overall US stock market which gained 26.5% and well above what we anticipated at the start of the year. It was boosted primarily by the highest risk asset GBTC, but pulled down by bonds (BND) and commodities (GSG).

We do not expect to be so lucky in 2024. Stock gains in 2023 were due more to increased valuations than improved fundamentals, so it's less likely they will continue with such high returns. Furthermore, the stellar 344% gain in GBTC was due to the 50% discout to NAV when purchased, and the developing likelihood of a spot Bitcoin ETF. This discount has mostly vanished, probably due to the market now pricing in a spot Bitcoin ETF—so both of those catalysts may be absent from 2024 returns.

Our portfolio remains substanially unchanged from a year ago. We remain overweight in international and small cap stocks. We've increased our US bond holdings (BND), Bitcoin (GBTC) and gold mining (GDX) slightly by pulling back from international bonds (BNDX) and commodities (GSG).

Target asset allocation as of January 1, 2024

December 30, 2022 Update

Our 2022 portfolio returned -15.9% for the calendar year, well above the overall US stock market which lost 21.5%. It was boosted primarily by the commodity ETF GSG, but also benefited from relatively good performance from AVUV and BNDX. The portion in Bitcoin and Ether was hit very hard, losing 65.5 and 68.3% respectively.

We expect better returns in 2023, though not as high as prior years, before 2022. Interest rates are expected to increase further in early 2023 with a recession likely to follow. Despite this, the S&P 500 sits at an above-average P/E which will presumably limit its returns in 2023 to small or negative single digits.

We remain overweight in international and small cap stocks, something that proved beneficial in 2022. We've increased our bond holdings above 2022 levels and restored an exposure to gold in the mining ETF GDX.

Target asset allocation as of January 2, 2023

January 2, 2022 Update

Our 2021 portfolio (further below on this page) returned 23.5% for the calendar year, slightly below the overall US stock market. It was boosted by VBR, VNQ, GSG, Bitcoin and Ether, but pulled down by our bond and gold holdings (BND, BNDX and IAU).

We expect a significantly lower overall return in 2022. High stock valuations combined with low, increasing interest rates should make this a tough year for investing.

We are increasing our equity holdings slightly, with more of a tilt towards value, small-cap and international businesses. We’ve reduced our bond holdings, but may increase them later in the year, pending interest rate moves.

Notably, we’ve eliminated our IAU (gold) position, but increased our position in the commodity fund GSG which includes gold, among other things.

Target asset allocation as of January 2, 2022

January 10, 2021 Update Notes

For 2021 we've decided to completely remove S&P 500 index funds for the first time. This was often our largest holding, but high valuations relative to smaller cap and international stocks steered us away.

Target asset allocation as of 2021-1-10

March 18, 2020 Update Notes

With the coronavirus shutting down the economy, a recession seems inevitable. However, equity valuations have already accounted for this to a large degree. The virus is expected to significantly reduce economic activity for at least 3 more months and government actions may be critical to get through this smoothly. There is significant uncertainty about what governments will do and even more in what the results will be. Experts are not yet sure how reinfection with COVID-19 will turn out or when a vaccine will be available—there's a possibility we'll have to repeat this exercise again this winter. This being said, we are increasing our stock holdings, but not to the extent we would with a clearer COVID-19 future. We want to reiterate now more than ever: this allocation is too dangerous for someone needing access to their funds within the next few years!

Target asset allocation as of 2020-3-18

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Comments / Feedback

invman Feb. 5, 2021, 3:58 p.m.
Thanks, love the portfolios. I must say your 2021 Bitcoin allocation seems excessive. That's a lot of risk dude!

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