Balanced Broadly Diversified Portfolio with Strong Historical Performance and Low Costs for Moderate Risk Investors

Risk profile

  • Secure
    Speculative

The risk profile, derived from past market volatility, reflects the level of risk the portfolio is exposed to. This assessment helps align your investments with your financial goals and comfort with market fluctuations.

Diversification profile

  • Focused
    Diversified

The diversification assessment evaluates the spread of investments across asset classes, regions, and sectors. This ensures a balanced mix, reducing risk and maximizing returns by not concentrating in any single area.

What type of investor this portfolio is suitable for

Balanced Investors

This portfolio is suitable for moderately risk-tolerant investors seeking a balanced approach to growth and income. Such investors typically have a long-term investment horizon and are comfortable with market volatility in pursuit of higher returns. They value diversification across sectors and geographies to mitigate risks and capture global opportunities. These investors prioritize cost-effectiveness and passive management, aligning with their strategic goals. They are committed to a disciplined investment strategy and understand the importance of staying the course through market fluctuations.

Positions

  • Vanguard Total Stock Market Index Fund ETF Shares
    VTI - US9229087690
    65.00%
  • Vanguard Total International Stock Index Fund ETF Shares
    VXUS - US9219097683
    35.00%

The portfolio is composed of two Vanguard ETFs: Vanguard Total Stock Market Index Fund ETF Shares at 65% and Vanguard Total International Stock Index Fund ETF Shares at 35%. This allocation offers a diversified exposure to both domestic and international equities. The high allocation in Vanguard ETFs indicates a preference for passive management, which is cost-effective and typically offers broad market coverage. Maintaining this composition supports long-term growth while keeping costs low. Consider periodically reviewing the allocation to ensure it continues to align with your investment goals and risk tolerance.

Growth Info

Historically, the portfolio has shown a strong performance with a CAGR of 11.09%. Despite a maximum drawdown of -34.54%, the overall growth trend remains positive. This reflects the portfolio's ability to recover from market downturns and continue generating returns over time. Understanding past performance helps set realistic expectations for the future. It's essential to remain patient during market fluctuations and stay committed to the long-term investment strategy. Regularly reviewing performance can help ensure it aligns with your financial objectives.

Projection Info

Using a Monte Carlo simulation with 1,000 runs, the portfolio's potential future performance was assessed. The simulation provides a range of possible outcomes, with the 5th percentile at 13.39% and the 67th percentile at 370.42%. The median outcome is a 257.01% return, indicating a strong likelihood of positive returns. Monte Carlo simulations are useful for understanding potential risks and rewards. While projections are not guarantees, they can guide expectations. It's crucial to remain flexible and adapt the strategy as needed based on changing market conditions.

Asset classes Info

  • Stocks
    99%
  • Cash
    1%
  • Other
    0%
  • No data
    0%

The portfolio is heavily weighted in stocks, with 99.33% allocated to equities, complemented by a small cash position. This concentration in stocks aligns with a growth-focused strategy, suitable for investors with a moderate risk appetite. A strong equity presence can drive long-term growth but also increases exposure to market volatility. Consider balancing the portfolio by incorporating other asset classes like bonds to reduce risk and provide stability. Regularly reviewing asset allocation ensures it aligns with evolving risk tolerance and investment goals.

Sectors Info

  • Technology
    25%
  • Financials
    16%
  • Industrials
    11%
  • Health Care
    11%
  • Consumer Discretionary
    11%
  • Telecommunications
    7%
  • Consumer Staples
    6%
  • Basic Materials
    4%
  • Energy
    4%
  • Real Estate
    3%
  • Utilities
    3%

The portfolio has a diversified sector allocation, with significant exposure to technology (24.55%), financial services (15.94%), and industrials (11.06%). These sectors drive growth and innovation, contributing to the portfolio's strong historical performance. Diversification across sectors helps mitigate risks associated with sector-specific downturns. It's important to monitor sector performance and adjust allocations if necessary to maintain diversification. This approach can help optimize returns while managing risk. Staying informed about sector trends can provide insights into potential opportunities and risks.

Regions Info

  • North America
    67%
  • Europe Developed
    14%
  • Asia Emerging
    6%
  • Japan
    5%
  • Asia Developed
    4%
  • Australasia
    2%
  • Africa/Middle East
    1%
  • Latin America
    1%
  • Europe Emerging
    0%

Geographically, the portfolio has a strong focus on North America (67.42%), with additional exposure to Europe, Asia, and other regions. This broad geographic diversification helps mitigate region-specific risks and provides access to global growth opportunities. A diversified geographic allocation can enhance returns by capturing growth in various markets. Regularly reviewing geographic exposure ensures it aligns with global economic trends and investment objectives. Consider adjusting allocations if necessary to maintain diversification and optimize potential returns.

Dividends Info

  • Vanguard Total Stock Market Index Fund ETF Shares 1.30%
  • Vanguard Total International Stock Index Fund ETF Shares 3.00%
  • Weighted yield (per year) 1.90%

The portfolio yields a total dividend of 1.9%, with the Vanguard Total Stock Market Index Fund ETF Shares contributing 1.3% and the Vanguard Total International Stock Index Fund ETF Shares contributing 3.0%. Dividends provide a steady income stream, enhancing total returns. Reinvesting dividends can accelerate portfolio growth through compounding. It's important to monitor dividend yields to ensure they meet income needs and align with financial goals. Consider the impact of dividends on overall returns and adjust the portfolio if necessary to optimize income and growth.

Ongoing product costs Info

  • Vanguard Total Stock Market Index Fund ETF Shares 0.03%
  • Vanguard Total International Stock Index Fund ETF Shares 0.08%
  • Weighted costs total (per year) 0.05%

The portfolio benefits from low costs, with a total expense ratio (TER) of 0.05%. This low-cost structure is a result of investing in Vanguard ETFs, known for their cost-effectiveness. Keeping investment costs low is crucial for maximizing returns over the long term. High fees can erode returns, making it essential to choose investments with minimal expenses. Regularly reviewing investment costs ensures they remain competitive and aligned with financial objectives. Consider maintaining this low-cost approach to enhance overall portfolio performance.

Risk vs. return

This chart shows the Efficient Frontier, calculated using your current assets with different allocation combinations. It highlights the best balance between risk and return based on historical data. "Efficient" portfolios maximize returns for a given risk or minimize risk for a given return. Portfolios below the curve are less efficient. This is informational and not a recommendation to buy or sell any assets.

The portfolio is well-diversified and cost-effective, aligning with efficient frontier principles. However, there may be room for optimization by adjusting the risk-return profile. Moving along the efficient frontier can help achieve a more conservative or riskier portfolio based on individual preferences. To reduce risk, consider increasing exposure to bonds or other low-correlation assets. For a riskier approach, focus on growth-oriented equities. Regularly reviewing the portfolio's risk-return balance ensures it aligns with evolving financial goals and risk tolerance. Consider seeking professional advice for complex optimization strategies.

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