A balanced portfolio with high dividend yield focused on US equities and moderate international exposure

Report created on Dec 18, 2024

Risk profile Info

4/7
Balanced
Less risk More risk

Diversification profile Info

3/5
Moderately Diversified
Less diversification More diversification

Positions

The portfolio is predominantly composed of three ETFs, with the Schwab U.S. Dividend Equity ETF making up the largest portion at over 73%. This focus on dividend equity indicates a preference for income generation and stability. The Schwab U.S. Large-Cap Growth ETF, at approximately 21.5%, adds a growth element, while the Vanguard Total International Stock Index Fund ETF Shares, at around 5.3%, provides limited international diversification. This structure suggests a strong tilt towards US equities, with a moderate emphasis on growth and income. To enhance diversification, consider increasing exposure to international markets or alternative asset classes.

Growth Info

Historically, the portfolio has shown a compound annual growth rate (CAGR) of 12.95%, which indicates strong past performance. However, it has also experienced a significant maximum drawdown of -32.82%, highlighting its vulnerability to market downturns. This performance is based on historical data, which may not predict future results accurately. Understanding these trends is crucial for setting realistic expectations. To mitigate potential drawdowns, consider incorporating more defensive assets or diversifying further across asset classes.

Projection Info

Using Monte Carlo simulations, which assess potential future outcomes based on historical data, the portfolio shows a median projected growth of 355.03%. The simulations reveal a broad range of outcomes, from a 5th percentile growth of 50.05% to a 67th percentile growth of 523.1%. While these projections provide insight into possible future performance, they are not guarantees. It's important to regularly review and adjust the portfolio to align with changing market conditions and personal financial goals.

Asset classes Info

  • Stocks
    99%
  • Cash
    1%

The portfolio's asset allocation is heavily weighted towards stocks, comprising over 99% of the total assets. This concentration in equities suggests a higher risk and potential return profile, suitable for investors with a moderate to high-risk tolerance. However, it also indicates limited diversification across asset classes, which can increase volatility. Consider allocating a portion of the portfolio to bonds or other asset classes to reduce risk and enhance stability, especially if nearing retirement or other financial milestones.

Sectors Info

  • Technology
    19%
  • Financials
    17%
  • Health Care
    13%
  • Consumer Discretionary
    12%
  • Consumer Staples
    11%
  • Industrials
    10%
  • Energy
    10%
  • Telecommunications
    6%
  • Basic Materials
    2%

The portfolio is diversified across several sectors, with significant allocations to technology, financial services, and healthcare. This sectoral distribution provides exposure to various economic drivers but also poses sector-specific risks. For instance, a downturn in the tech sector could disproportionately impact the portfolio. To manage these risks, regularly review sector allocations and consider rebalancing to maintain a balanced approach. Additionally, exploring emerging sectors could provide new growth opportunities.

Regions Info

  • North America
    95%
  • Europe Developed
    2%
  • Asia Emerging
    1%
  • Japan
    1%
  • Asia Developed
    1%

Geographically, the portfolio is heavily concentrated in North America, with over 94% of assets allocated to this region. While this focus may benefit from the stability and growth potential of the US market, it limits exposure to international opportunities. A more geographically diversified portfolio can help mitigate regional risks and capture growth in emerging markets. Consider increasing allocations to regions like Europe or Asia to enhance diversification and potentially improve risk-adjusted returns.

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.

Click on the colored dots to explore allocations.

The portfolio could potentially be optimized using the Efficient Frontier, which seeks the best possible risk-return ratio. This involves adjusting the current asset allocation to achieve a more efficient balance between risk and return. While this process can enhance performance, it does not guarantee diversification or alignment with specific investment goals. Regularly reassessing the portfolio's efficiency and making necessary adjustments can help maintain an optimal risk-return balance, contributing to long-term financial success.

Dividends Info

  • Schwab U.S. Dividend Equity ETF 3.60%
  • Schwab U.S. Large-Cap Growth ETF 0.40%
  • Vanguard Total International Stock Index Fund ETF Shares 1.60%
  • Weighted yield (per year) 2.80%

With a total dividend yield of 2.8%, the portfolio offers a steady income stream, primarily driven by the Schwab U.S. Dividend Equity ETF. This yield can be an attractive feature for income-focused investors, providing cash flow without the need to sell assets. However, dividend yields are not guaranteed and can be impacted by market conditions. Regularly monitor dividend payments and consider reinvesting dividends to compound growth over time, enhancing long-term returns.

Ongoing product costs Info

  • Schwab U.S. Dividend Equity ETF 0.06%
  • Schwab U.S. Large-Cap Growth ETF 0.04%
  • Vanguard Total International Stock Index Fund ETF Shares 0.08%
  • Weighted costs total (per year) 0.06%

The portfolio's total expense ratio (TER) is low, at 0.06%, reflecting cost-efficient management. Keeping costs low is crucial for maximizing net returns, as fees can significantly erode gains over time. It's important to remain vigilant about fees and seek opportunities to reduce costs further, such as by switching to lower-cost alternatives or negotiating fees. Regularly reviewing the cost structure can lead to improved long-term performance and better alignment with financial goals.

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