Note: This is not investment advice.

I’m using Grok 3 to help manage my stock portfolio. It had some great insights that are going to make me a lot of money.

Let me show you what I did and how you can use Grok to help you with your investments too…

Pre-Grok Allocation

Lately, I’ve been thinking about my asset allocation. Here’s the rather odd set-up I have now:

• 50% VFIAX – Vanguard S&P 500 Index Fund
• 25% VHYAX – Vanguard High Dividend Yield Index Fund
• 25% VTIAX – Vanguard Total International Stock Index Fund

The part I’ve been really questioning lately is the VHYAX.

I bought it about 3 years ago. The idea was to provide stability and income in the portfolio. So, a fund full of dividend paying blue chips made some sense.

VHYAX replaced a long-term Treasury index fund I owned before this. Seeing that rates were likely to go up around the end of 2021, I knew those bonds would get killed.

So I sold them all at the end of 2021 and beginning of 2022, just averting some big losses. I replaced those bonds with VHYAX.

VHYAX is better than what I had. But is it optimal?

Grok’s Recommendation — US and Foreign Stocks

These last few months, I’ve been wondering why I have this “stability and income” portion at all. Why not lean into long term growth?

I’m 39 years old with a high risk tolerance. My biggest goal is to grow my capital.

If I take some losses along the way, that’s fine. My lifestyle is fairly simple and I can weather it.

So with that in mind, I turned to Grok 3. Here’s the prompt I used:

“Assume I have a portfolio of index funds. My goal with this portfolio is long term growth. How should I allocate this portfolio across different types of index funds? Consider options like US index funds, foreign stock index funds, etc. I am 39 years old, so my time horizon is long. My risk tolerance is high. What would be the best allocation, given all this information? Use the best research you can find to support your answer.”

Here’s what it came up with:

Grok recommended a 60/40 US/Foreign split. This is in line with research from Vanguard which Grok linked me to in another query.

I asked a bunch of follow-up questions, proposing a 65/35 US/Foreign split. After all, most of the innovative companies are here.

Grok concluded that the performance difference between the two is likely to be minimal, so either way could work.

65/35 it is!

Grok Recommends Dumping the Dividend Payors

I also asked about my VHYAX and whether it truly fit with my goal of long term growth.

Grok confirmed my suspicions that VHYAX is working against me. The trade-off for those dividends is less long term capital appreciation.

Grok quoted a difference of several percentage points a year between VHYAX and a regular stock index fund like VFIAX or VTSAX (Total Stock Market). I researched this on my own and confirmed that Grok is right.

I then had Grok model the difference in returns over 30 years between a lower-returning VHYAX and a higher returning VFIAX or VTSAX. It’s huge — we’re talking millions of dollars.

The performance disparity makes sense when you consider the portfolio composition of these funds.

VFIAX is 31% tech stocks. VHYAX is just 11%.

Long term, technology is what’s going to drive growth, in America and worldwide. To have such a small allocation to it is a huge drag on performance.

To dump the VHYAX, I have to pay a little long term capital gains tax. But it sounds like this short term tax hit will be well worth it in the long run.

Taking Action

Based on my conversation with Grok and my own research, I took action to get this portfolio in better shape.

I sold all the VHYAX. With the proceeds, I bought VTSAX and VTIAX. (VTSAX is a broader fund that’s slightly better than VFIAX. I didn’t sell my existing VFIAX because it would trigger a huge tax bill that doesn’t justify the tiny edge that VTSAX has.)

Here’s what I have now:

• 65% VFIAX/VTSAX
• 35% VTIAX

I’ll rebalance this yearly if the allocation gets off by at least 5 percentage points.

This is an asset allocation I plan to keep for many years. I’m well positioned for long term growth, with exposure to both US and foreign markets.

Getting the Most Out of Grok

Your financial goals may be completely different from mine. But you can still use Grok to help you manage your money.

The key is to give Grok lots of context.

Tell it your age, your time horizon, and your risk tolerance. That way, it can give customized advice.

Once Grok gives you its initial response, ask it lots of follow-up questions.

Have it explain its recommendations. Ask it to run through various scenarios.

You have an endlessly patient helper here — make use of it!

Grok comes up with some great ideas, but it’s important to verify the facts it relies on. LLM’s are not perfect. Read the underlying research yourself.

I did not find any hallucinations when I used Grok. But hallucinations are still a possibility.

Finally, think for yourself!

Grok is just there to advise you. Run the prompt through other models (I also used Gemini Deep Research). Take some time and just think.

Consider Grok’s advice one input among several. In the end, the decision is yours.

Wrap-Up

I’m confident that this new asset allocation will give me a strong base for the future.

Grok was incredibly helpful in providing advice and helping me game out scenarios. It’s like having a super smart analyst that you don’t have to pay, available 24/7.

I encourage you to put this analyst to work! Have it run through your investments and find out how you could be making more money.

But always use your own judgement. It’s a helper, not a boss.

More from the blog:

How Good is Grok 3?

US Stocks Are Extremely Overvalued

Missing Figure

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