The internet is full of questions and advice concerning the right ETF mixes in relation to saving rate and time frame.
The discussions usually go like this: “I’m X years old, have such and such ETFs at the moment with Y savings-rate in my portfolio, and expect to die at the age of Z.
Am I doing the right things (ETF choices and saving rate)? Will the money last? Which ETFs should I hold, which one sell? Etc.”
Besides ETF’s, these type of questions can be find with all other assets as well.
But to me, this approach is not ideal, however, it indicates the typical beginner’s discussion.
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Your Story Matters
Imagine you are talking to a doctor, telling him you get out of breath while climbing the stairs and ask him if this circumstance is OK or not, and, if not, if he can fix that problem.
Imagine this talk takes place on the phone, he doesn’t see you and he doesn’t know you besides that you are a male of 35, and that you don’t run the stairs.
What do you expect him to tell you?
The investigation of the symptoms should first be carried out by yourself. Only you know your exact diet, weight, conditions, any changes in your physical or psychological well-being, etc.
If you can break down every category, you would be able to start the conversation with something like: I’m a male of 35 with a bit overweight, and for two weeks I’m a bit slow of breath while climbing the stairs. I had a rough time recently because of my grandmother passing away, and I started smoking again. However, being out of breath after the 4th floor quite annoys me. What can I do about it?
And the same is true with asking questions about your portfolio. The examination should be first on your side. Doing this work will reveal your initial motives, which are always gold to know anyways.
Be As Specific As Possible
Why did you choose these ETFs (or any other assets in general) in the first place? What was the reason behind it? Why are you not satisfied anymore or unsure? What has changed?
The quality of your questions will determine the quality of your outcomes -> in this case the answers that are given to you. Because there isn’t usually one correct formular that fits all needs or even preferences. Some people like having only two ETFs while other like having 5+. Some like it simple with only MSCI/EM and the rest in cash, some want to have it more complex. Some people may be biased towards certain companies who are involved in military, tobacco or alcohol. What if such people tell you to “never buy ETFs with these companies”? They may be right from their point of view, but not from yours. It is similar going to a bank and getting offered only their products.
The justification for your decision matters – only you know the reasons. Tell these reasons. In the above example the story changes if you tell your doctor that you had just surgery in both knees and didn’t make any sport for the last three months. Now the story of you being a little out of breath sound totally different. The story behind is more important than showing off what you have in your portfolio. Examining the story is worth time investigating. The Buddhist say work at the root. There is no better teacher than your core root. The rest is a matter of form.
PS: To nail down the ‚form‘ of your questions and plannings, I recommend using Excel. Check out my recommendations about learning how to take your Excel skills to the next level – and be able to build your own portfolio to always track your numbers in real time!