s&p 500 ... what would be a "no brainer" safe percentage of portfolio?

Discussion in 'ETFs' started by stockmarketbeginner, Jan 11, 2018.

  1. Hello,

    I'm getting into ETFs.

    I keep buying the S&P 500 ETF while I figure out the other ones. So now I have about 10% of my total portfolio in the S&P 500.

    I know standard asset allocation often says 60% stocks, 40% bonds until you get closer to retirement.

    Is it OK to have 15% or even 20% in the S&P 500 ETFs? If it takes me a month or two to research and buy the other ETFs, I can miss out on a lot of the S&P 500 gains (it's moving up a lot this month).

    I'm not sure what a "no brainer" percentage would be. Kind of like "if you have no better ideas at the moment... it is ok to go up to this percentage without worrying about having too much of the S&P 500."

    Rather than having the money parked, I've been adding to my S&P 500 ETF position while I learn sensible things to buy in other ETFs (like a "world" etf, or a "bond" etf, etc.). But I don't want to go higher than a sensible percentage.

    Thank you.
  2. tomorton


    There's no such thing as a no-brainer.

    Have you identified what lower price would cause you to get out of your S&P position?
    How much in capital would that cost?
    What proportion of your account would this represent?
  3. 400% full leverage seems safe.
    Haven’t had a 5% pullback in a year and a half.
    What could possibly go wrong? Just watch CNBC and see the bullishness. Free money
    iprome, ET180, comagnum and 1 other person like this.
  4. clacy


    Risk and time frame are all relative to each individual's needs.

    10% seems really light for a long term portfolio, but if you need the money and can't afford a large loss, then 10-20% is probably maximum.
  5. S2007S


    With a post and a name that reads stock market beginner this is feeling like a short term top...

    Not even a single 3% pullback...in hundreds and hundreds if days...mwgen that first 3% drop comes it's going to feel like the 2008 financial crisis once again, no one will have a clue what's happening!!!
  6. ElCubano


    and that drop will be done in the first 10 minutes of trading one day.....then back to business.
    Clubber Lang and theapprentice like this.
  7. erick_red


    I recommend you look for an investment adviser, while you learn from the market, he will study your case and will tell you the volume of investment in the S & P you should have. Each case is a different case, there is nothing dogmatic in this
    stockmarketbeginner likes this.
  8. drcha


    If you go back over time, look at longer-term Treasuries and the S&P 500, and use the Kelly criterion, you'll see that 60/40 is about where you end up as an optimal allocation. That's probably why so many of those funds exist.

    When I get a question from someone who knows zero about trading or investing and wants to know what to do with a wad of money (money being something they are basically afraid of), I usually recommend a 60/40 fund. You won't shoot the lights out, but you won't get crucified in the downturns.

    However, you'd be better off just trading the S&P 500 using a long-term MA, like the 10-month. You'll make better returns than 60/40.

    60/40 is really only for the set-it-and-forget-it crowd.

    If you are young and willing to ride through the bumps, or you are an experienced trader and have some reasonable rules for when to get in and out, there is nothing wrong with a very high allocation to the index.
    stockmarketbeginner likes this.
  9. Will you be adding to the account monthly? yearly? How often will you rebalance your portfolio? This sounds a lot like what Ben Graham recommends in "The Intelligent Investor". So let me see if I understand your question, you want to know within the 60% portion of your portfolio dedicated to stocks, how much you should put in a S&P 500 ETF? So basically you need to develop a methodology to invest in stocks so as to be appropriately exposed to this asset class. Am I right?
    stockmarketbeginner likes this.
  10. Yes. Assuming a majority equity/ minority cash, how much of the equity portion can you dedicate to the s&p before you start thinking you should put the rest of the equity portion into other etfs.
    #10     Jan 13, 2018