Disclaimer: I reserve the right to tweak my statement at any time but what I won’t do is sell when the market crashes. Notice I said when because crashes are inevitable. As history has shown us, the market rebounds and when you look at it in the long-run, there are many dips but it always goes up. The key to investing in the market is to use it as a long-term investment strategy.
There are three asset classes to invest in:
- Paper asset class
- Real estate asset class
- Business asset class
My current investment strategy is heavily weighted in the paper asset class. I invest in low-cost index funds and while I am in the wealth accumulation phase I am invested in 100% equities. As I approach the wealth preservation phase I plan to change my asset allocation to include bond funds. Approximately 5-7 years out from retirement, I will switch from 100% equities to 70% equities/30% bonds. I will re-balance annually and perhaps become weighted more and more heavily in bonds.
I am currently maxing out 3 different tax-advantaged accounts:
- Employer-sponsored Simple IRA – Vanguard Total Stock Market Index Fund Investor Shares (VTSMX)
- Health Savings Account – Vanguard Total Stock Market Index Fund Admiral Shares (VTSAX). I max this out annually but 25% goes to a cash account/debit card for health expenses.
- Roth IRA – Vanguard FTSE Developed Markets ETF (VEA).
I maintain an easily accessible emergency fund to cover 3-6 months of expenses in an online savings account. This account also includes funds for a future car purchase and is being grown to include a down payment to purchase a house. Additionally, I am researching other Vanguard index funds to spread out my equity investments in:
- Growth & Income
- Aggressive Growth
My plan is to enter the real estate asset class within the next 5 years to become more diversified. The final asset class I am looking to enter is the business asset class. Stay tuned for future strategies here.