Last month I started using our new pension plan here in Norway. And since these funds needs to be in a separate account from my main portfolio, I asked my self if I should just mirror my dividend portfolio, or do something else. My answer was to start an index portfolio.

I've been interested in index investing since the very beginning of this blog. The name of this blog is actually a product of that interest. I'm not trying to beat the market, just following it. I litteraly aim for a beta of 1.

I went for a passive dividend strategy to also satisfy my interest in stock picking. But when I now had the chance to build a second portfolio from scratch I thought I should give the indexes a chance after all.

I cannot withdraw funds from the pension portfolio until I turn 62 (which is in about 3 decades). And that is the main reason for why I'm going for an index portfolio here. The next 30 years are uncertain for me. But by choosing to just follow the market in these 30 years I have a strategy that will not depend upon me, and thereby be unaffected by any changes in my personal life.

So after my decision to invest in indexes I needed to select which ones to put my funds in. Since I reside in Norway, and plan to do so for the remaining of my life, I have an incentive to increase my purchasing power relative to the Norwegian economy. I've therefor chosen to put 30% of my portfolio in OBX (the index of the Norwegian stock exchange), and the remaining in foreign markets.

The table below lists all the markets I've invested in and their current weights.

Index Weight
World 30%
Europe 30%
Norway 30%
Emerging Markets 10%

Now, I know I said that the strategy should be constant for 30 years, but I may change the weights as I'm getting older. Right now I have a relatively large portion in emerging markets to increase the long term expected yield, but since the volatility is larger here I'll need to adjust this as I'm getting closer to retirement.

Since one of the attribute of the new pension plan is that you can only invest $4,500 a year, I do not expect this index portfolio to surpass my dividend portfolio. But it should be interesting to measure the percentage returns between them in the future.

Thanks for stopping by, and let me know if you also are interested in index investing!

Carl @ MoneyMow
October 14th, 2018 06:46

Very interesting! I like the index weights, but personally I put more into emerging markets as I expect them to grow faster than anywhere else.

The Beta Post
October 15th, 2018 12:59

Yeah you're right about that Carl, in the long run they should provide a better return. Maybe I was too conservative here :)

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