Several people have asked me about my asset allocation besides P2P lending, so I decided to give you a detailed breakdown of my entire investment portfolio.
I love seeing other people’s real numbers and actual progress when it comes to investing. Personally, I just find that way more interesting and motivating, I’m sure a lot of you feel the same way.
My friend Bernhard Hummel is a great example of this, talking to him always makes me excited about investing.
Many of you told me in comments and e-mails that you appreciate my transparency when it comes to sharing my numbers openly, so I wanted to try paying back your support by putting all my numbers openly on the table in this post.
I couldn’t wish for a better community of people reading my blog and watching my videos on YouTube. The same goes for the people I regularly interact with in P2P-related groups on Facebook (1)(2). You guys are awesome.
I have to be honest, I was struggling a bit with my decision to share all of my assets like this. After all, I’m displaying everything here and in most places in Europe, we don’t really talk about money openly.
Nonetheless, in the end I decided to go for it!
My Entire Investment Portfolio
For more context, here is a bit of background information. I’m 29 years old and married. My wife is 26 and currently finishing her Master’s degree.
I’ve been earning money far longer than she has, so technically, 3/4 of our investments come from my side. Everyone has their own view on this, but in our case, we count all of our investments together as one family portfolio.
So whenever I write “my portfolio”, what I really mean is our shared investment portfolio.
That’s also how we make investment decisions. We first look at how much we have in each asset class already and then decide.
We live a happy, minimalist lifestyle with low living expenses, which allows us to save most of the money we make from work. But I think that’s a topic for another day.
Not that I’m an authority on the subject, but based on my own experience, I’ll just say this:
If your goal is to one day reach financial independence, meaning being able to live purely off the returns from your investments, it doesn’t matter how much money you make – what actually matters is how much of that you’re able to save and invest.
Portfolio Part 1: ETFs
Alright, after that long introduction, here is the first and biggest position in our portfolio.
You might be surprised to hear this: It’s not P2P lending, but actually exchange traded funds, also known as ETFs.
We currently have close to 30% of our portfolio, meaning 39.000€, invested in broad, low-cost ETFs, covering equities all over the world. They make up the bulk of our long-term investments and we are not planning to touch this part of our portfolio over the next 10+ years, maybe ever.
I also consider ETFs to be a good protection against higher inflation, in case the Euro loses its value for whatever reason. In the past, the stock market has been a good hedge in periods of hyperinflation, as was the case in Germany between 1920-1924.
How I got started with ETFs and my experience so far
I started my foray into ETFs in the beginning of 2017. First through a robo advisor. Then, I realized I could easily do it myself and save the money I was spending on fees.
So within two months, I withdrew everything and invested it into ETFs myself. At the beginning, I thought I was smarter than the market, so I split my money into 4 ETFs, each one covering a separate region:
- The US
- Emerging Markets
- The Pacific
My thought process was that I would simply rebalance on a regular basis (meaning move over some money from better performing ETFs to the worse ones) and maybe outperform the market as a whole.
I quickly learned that was way too much effort and would probably lead to a worse performance, since every ETF purchase or sale comes with costs and if the one I’m selling made profit, that profit would now also be taxed right away, instead of in the future.
So I ended up switching to another strategy that you’ll hear a lot of European investors mention, only buying 2 ETFs: The MSCI World (covering developed markets in the world) and the MSCI Emerging Markets (covering emerging markets).
However, in the long-run, we made the decision to simplify our ETF investing strategy even further, only buying one index:
The Vanguard FTSE-All World (ISIN: IE00B3RBWM25).
It covers 3.354 companies from all over the world, including emerging markets.
We’re still keeping the MSCI World shares we already bought in our portfolio long-term, but we’re only investing new money into the All-World ETF.
Here is how much we have in each ETF at the moment, in case you’re wondering:
- 52% of our funds are in the Vanguard ETF
- 48% in the MSCI World
Obviously, the percentage allocation to the All-World is going to increase, the more we invest into ETFs going forward.
If you‘re new to equities and index investing and you only know P2P lending so far, you should know that ETF prices can go up or down quite a bit, so if you buy ETFs, my advice is to buy & hold long-term and don’t buy ETFs if you need to access your investment within the next couple of years.
Stock market corrections or even crashes are part of the game. Personally, I view them as discounts I can take advantage of to add more ETF shares to my portfolio at a lower price.
My lesson for anyone new to ETFs is this one:
Keep it as simple as possible. One broad, low-cost ETF covering worldwide equities is probably enough.
Our ETFs currently pay about 2,4% dividends per year. That’s around 938€/year or 78€ per month, before taxes. We reinvest the dividends right away and expect long-term returns in the ballpark of 7% per year from our ETFs.
Portfolio Part 2: P2P Lending
The next position is the one you already know about, P2P Lending.
Peer to Peer Lending currently makes up 24,1% or 31.515€ of my portfolio.
For some of you, my P2P allocation might seem high, while others might have a higher percentage of their net worth in P2P lending. At the end of the day, it’s your money and you have to feel comfortable with your investments and your allocation.
If you’ve been following my monthly P2P income updates, you already know the platforms I’m invested in, but here is a little overview.
|Envestio||12,36%||3.895€||5€ + 0,5% Cashback|
|Iuvo Group||10,69%||3.369€||90€ Bonus|
|Monethera||4,11%||1.295€||5€ + 0,5% Cashback|
|Mintos Invest & Access||3,29%||1.038€||0,5% Cashback|
|Bondora Go & Grow||3,25%||1.026€||5€ Bonus|
My Investments in Crowdlending generated 319€ in interest last month, so if the trend continues, I expect around 3.800-4.000€ in passive income from P2P lending per year, which I’m also reinvesting every month.
Portfolio Part 3: Crypto…
Now comes the part that I’m the least proud of: Cryptocurrencies.
In mid 2017, when cryptocurrencies started showing up everywhere, I also got caught up in the hype and bought some. From the beginning, I knew I could lose everything, and I still think that’s the case today. As prices were shooting up, I let my emotions get the better of me and kept buying more.
Overall, I bought a total of 20.100€ worth of mostly Bitcoin and Ethereum from mid to late 2017. I want to be clear, this wasn’t investing, but rather pure speculation.
But the worst part of the story has yet to come. In December 2017, that portion of my portfolio had tripled in value, to 64.000€.
I was thinking about selling, to realize some profits, rebalance my portfolio and to decrease my allocation to a much lower percentage of 5-10%, something that I would be more comfortable with.
However, like many others, I got greedy.
I was thinking to myself: Why sell now and pay high taxes on top of the income I made this year, when we have a law that would allow me to pay no taxes on profits if I sold my cryptos after holding them for a year?
Looking back, that was the worst financial decision I have ever made.
One year later, when I could have realized my “profits” tax-free, there was nothing to be taxed in the first place, as I was making losses now.
Luckily, they recovered a bit in 2019 and I’m currently close to break-even. In the end, I decided to hold on to this part of my portfolio for a couple of years.
I’m speculating we might see another bull market in the next couple of years and I might be able to sell a large portion of it at a profit, but it’s also very possible that won’t happen.
We’ll see how this “adventure“ ends.
Portfolio Part 4: Cash
Alright, now that I probably ruined your mood with that sad story, let’s move on to the next portion of our portfolio: Cash.
We currently have 11,7% or 15.317€ in cash. Why so much?
Well, part of it is our emergency fund, meaning about 6 months worth of living expenses. The rest of it is money I need to have readily available to pre-pay social insurance as well as taxes on a quarterly basis, since I’m self-employed.
Portfolio Part 5: Apartment – Well, sort of…
The second to last part of my portfolio is the apartment we live in.
To make things clear, we don’t own the apartment, we’re just renting. But in order to get our awesome one-room apartment, which gives us a lot of freedom because of the low rent, I had to pay around 15.500€ when I moved in a couple of years ago.
That amount decreases by about 1% every year that we live here and is currently worth around 14.980€ or 11,5% of our Portfolio.
We’ll get that money back if we decide to move out, so I included it as part of our assets.
Portfolio Part 6: Invoices
And finally, we have unpaid invoices, making up 9.631€ or 7,4% of our portfolio.
This is yet to be paid business income that we earned during the past couple of months working on some larger projects. We should receive most of it within the next 4-12 weeks.
There you have it, that’s our current asset allocation.
As of late November 2019, our Portfolio is worth a total of 130.609€, give or take.
I know many of you want to hear more specifically about ETFs, so I’ll make sure to create separate content on the topic before the end of the year.
- I’m very interested in your asset allocation as well, if you’re willing to share. In case you don’t want to disclose everything – How much of your portfolio (in %) do you currently have invested in P2P lending or ETFs?
I hope you enjoyed reading through my detailed portfolio breakdown!
If you made it this far and you’d like to support me, you can do that by using any of my links to test out a P2P lending platform for yourself.
Other links you might be interested in:
- The Latest P2P Lending Bonus & Cashback Offers
- My P2P Lending Income in October (319€)
- How To Track Your Investments in P2P Lending
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