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My 401k: What Stocks I’m Investing In (And you Should Too)

For those getting started investing, either for a retirement account like a 401k or IRA or for non-tax-advantaged accounts, it’s often stressful to figure out what stocks to buy. One approach would say “you can’t beat the market” and therefore you should just buy index funds that match exactly what’s in the market. The problem with this approach is that you are buying the bad companies along with the good – and are totally exposed to the ups and downs of Wall Street.

A better approach is to research solid companies and hold them for the long term. In this way you can capture “alpha” – returns over and above the risk adjusted returns of the overall market. For retirement accounts, one more factor is income – so dividends are also important. Besides, history shows much of the stock market’s gains over the years is due to dividends, not stock price appreciation.

So: as a long-time investor myself, trained on Wall Street and working in finance, I thought I’d share with you what I’m investing in (with significant six figures $) for your learning. In this post I’ll share my 401k, in another post I’ll share my IRA holdings. Of course, when tracking investments it’s a good idea to have a handy mobile app like Stock TickerPicker on your iOS device to easily monitor their prices – I recommend downloading it today. And if you aren’t savvy on understanding market moves and want to learn about technical analysis, you can read about that here too.

Here’s my 401k. In it, I’m focused on ETFs of global dividends of various kinds, as well as solid companies that will grow as the global economy grows. I also invest in a bond fund to balance the portfolio.

  • FPURX: Fidelity Puritan, a conservative bond fund.
  • IYT: Transportation ETF, with 30%+ allocation to railroads (a growth area over the long term, I believe)
  • LVL: Guggenheim global dividend opportunities ETF. 6%+ yield.
  • MOAT: My best investing idea. An ETF of 30 holdings made up of companies with a competitive moat. Should produce outsized gains over time.
  • MORT: My 2nd best investing idea. A mortgage REIT ETF, with12%+ dividends. Riskier, but the dividends are so juicy…
  • MSP: Madison strategic vector ETF. An under-appreciated closed-end fund.
  • PBP: A buy-write conservative ETF. Won’t go down as far when the market goes down.
  • SDIV: global high dividends fund
  • YMLP: A good way to invest in MLPs without the schedule-K hassle

So: what’s the comprehensive strategy here? Why did I pick this set?

  • Not too many investments – I can keep up with them
  • Mostly dividend focused – with interest rates so low, bonds have nowhere to go but down and returns are poor anyway, leaving dividend stocks as the best choice
  • A mix of global and US, tipping conservative though (no internet high-fliers, etc)
  • Some investments merely for dividends, targeting 6-12%, while others for long-term economic strength & growth
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