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April, 2022: 30

Disclaimer - IMPORTANT - Read this first!

Investor's Journal is a diary focused strictly on investments and personal finance issues, primarily from a contrarian and retiree point of view. Follow along with an average guy's failures and successes as he learns, by trial and error, the fine art of value investing.

Our portfolio is on track to achieve a year-end total dividends target of $58,320. Dividends for 2022 should total over $59,000. (As often mentioned previously, our ongoing goal for portfolio dividends is, from their latest base of $50,000 in 2020, to assure they show an annual 8% or better increase.)

Liquid assets are down $187,694 or 9.12%, since 3/26 and, as of the close of trading on Friday, 4/29/22, stood at $1,870,096.

Assets of all kinds (real estate, equities, collectibles, etc.) are down 6.34%, or $166,941, since 12/31/21. The nest egg total is now $2,464,996. If not for a marked increase in our residence's appraised value since last year, the comparative nest egg loss after the end of 2021 would be substantially higher.

Our portfolio of liquid holdings remains roughly two-thirds in lower risk securities (reserves, bond assets, or value holdings) and the rest in higher risk ones. These latter (growth or growth plus momentum) assets continue to be a big drag on performance.

Despite solid overall gains since this time two years ago, the recent drops in market value can feel discouraging. One's investing metal can be tested in such periods.

If one finds the downward volatility distressing, he or she might consider a simple, fairly straightforward way to generally beat the market. Just invest half of available funds in a good, low cost large-cap value fund, the other half in a fine, low cost small-cap value fund, and rebalance annually to restore the 50/50 allocations.

Since 1970, this approach has nicely bested the S&P 500 Index, on average by a significant margin, though from one year to the next this may not always be the case. It has the added advantage that one need not frequently monitor one's assets or trade in and out. Instead, one more or less can set up the portfolio and forget it till the next rebalance date comes up.

A couple excellent exchange traded funds for this purpose are: VTV (Vanguard Value Index Fund) and VBR (Vanguard Small-Cap Value Index Fund). Of course, past results do not guarantee future returns. Nonetheless, this approach seems sure enough for me personally that I'm putting a significant part of our liquid assets into the 50/50 ratio of VTV and VBR. (As always, it is recommended that each individual carry out his or her own due diligence and/or consult a professional in the field before buying any equity shares.)

For one's annual rebalancing, one might avoid the last several days of the year, when extra capital gains distributions might complicate the effects of new purchases of the funds. In addition, except in tax-deferred accounts, rebalancing a year and a day after prior transactions should help avoid most gains being treated as short-term (and so taxed at a higher level).

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