| | | There are several reasons for using SPY and having it represent at least 25% of that portfolio, although it has a way to go to get to that valuation, but I'm going to add a little more to SPY near the close today.
1) My son has no interest in following the market so I have to simplify things for him for when I'm no longer around to manage his portfolio.
2) He's not in a position to add a lot of cash on a monthly basis, only $600 per month, and with that small amount of cash to invest, he can't build positions of size when there are many holdings in the portfolio, so I have been lowering the number of holdings he has so that the remaining positions can be built up much easier. ... The portfolio currently has 26 holdings and I will get it down to 24 in January.
3) Since I am limiting the number of holdings he has, I am losing a good bit of diversification, so in owning SPY and making it the largest holding in the portfolio, he will have that diversity needed since he doesn't know anything about the market.
In taking this approach, he might lose some dividend growth, but I think he'll make up for it in capital growth. At least that's the thinking today. |
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