Hi McR, I've been a full time investor since '86 which I mentioned in another post. However, I've also managed my IRA as "self directed" since the very beginning of accumulation in 1982. For a long time I put interesting stocks in the account, but found that the "single stock risk" in a small account like my retirement fund was just too high when it manifested itself!
So, I switched to a diversified mutual fund for most of the 1990s. Not a bad time to be in a growth fund. I also like to do some risk management of my holding, and found that using a traditional mutual fund was less than exciting for that purpose. In 2002 I changed the structure of my IRA to be similar to a "growth and income" fund, but comprised of Exchange Traded Funds (ETFs) following various business sectors and a couple of very high yield bond funds (one govt. and one corp.).
The method allows me to use my risk management method in a more effective fashion and still gives me the broad diversity that I was seeking. So far, so good. I've not had a single loss since making the change. It's not the most exciting portfolio in the world, but seems to function well.
With a traditional fund, they would own a variety of business sectors. If Energy was going UP and Tech was going DOWN, they would somewhat cancel each other in the Net Asset Value of the fund. There was no opportunity for me to benefit from either the tech being low priced or the energy being high priced.
By dividing up the account into Sector ETFs I can now take profits in Energy when it's up and add to my Tech holding when it's down. I end up being proactive in both parts of my overall portfolio when before I could only watch.
Here's the web page devoted to my IRA. It shows the various components and a summary of the entire grouping. 2004 has been a bit of a dullard, but '03 was acceptable. The main point is that the account is growing slowly while I make these minor adjustments internally.
aim-users.com
It might not be right for everyone, but it suits me well enough.
Best regards, Tom |
