It is now September 8th, 2014 and that makes it one full year since I bought the first stock (CHL) for my $150,000 portfolio. Now is the time to figure out what my return for the year was and you can see those numbers below.
Starting Value = $150,000
Value 1 Year Later = $165,417 (this value includes dividends)
1 Year return = 10.28%
The formula used to calculate the percentage is:
My portfolio had a rough start as my China Mobile purchase immediately went down from the purchase price of $56.15 to the mid $40’s. But rather than sell, I stuck with the stock and now have a nice gain to show for it. I then bought Hewlett Packard and Apple in December and those were the stocks that brought it out of the red and into the black for good.
I’ve Had A LARGE Amount Of Cash For Much Of The Year
I still have over $50,000 in cash so only 2/3 of my money is in stocks at the moment. Additionally, throughout the just completed one year period, most of the time I had even more than that in cash so I am very happy with the total return. Cash right now is making close to 0% so that is not benefitting me in any way. But, I don’t want to put everything in the market right now.
The stock market keeps pushing to new highs and that has made me weary from the very beginning. It has definitely affected how much of my money I wanted to put in stocks and how much I wanted to keep on the side, just in case the market started to go down.
What Should You Do? Keep Cash Or Go All In With Stocks?
What you decide to do or not do in regards to how much to have in stocks and how much to keep in cash will depend on you. That means it depends on your age (amount of years you have to invest), the amount of money you have to invest, your risk tolerance, and just generally how comfortable you feel having money in the stock market.
For some people with a high risk tolerance, they are fine with everything being in stocks and they are a young enough age that they can wait out any market downturns. For other people though, they might choose to be more conservative and have a percentage in cash that makes them sleep better at night. It is totally up to you what you decide is best for you and discussing such matters with a financial planner might be advisable if you have doubts.
Like I always say though, the first step is to just get started. Most people never learn anything about investing their money and know nothing about the stock market. That is their loss. It is important that you learn all you can and take control of your own finances so you don’t have to rely on someone else who you might not even know or trust. Start slow, but do get started!