A balanced portfolio emphasizing U.S. equities with moderate international exposure and low costs

Report created on Dec 9, 2024

Risk profile Info

4/7
Balanced
Less risk More risk

Diversification profile Info

4/5
Broadly Diversified
Less diversification More diversification

Positions

This portfolio is composed of two main ETFs: the Vanguard Total Stock Market Index Fund ETF, which makes up 70%, and the Vanguard Total International Stock Index Fund ETF, comprising 30%. This allocation leans heavily towards U.S. equities, reflecting a strong domestic focus. ETFs are popular for their low costs and ease of diversification. The high percentage in U.S. stocks suggests a belief in the stability and growth potential of the American market. To enhance diversification, consider including other asset classes like bonds, which can provide stability during market downturns.

Growth Info

Historically, this portfolio has shown a compound annual growth rate (CAGR) of 12.02%, indicating robust past performance. A hypothetical investment of $10,000 would have grown significantly over the years. It's important to note that past performance doesn't guarantee future results, but it does provide insight into how the portfolio reacted to different market conditions. The maximum drawdown of -34.59% highlights potential risks during downturns. To mitigate such risks, consider strategies like diversification or setting stop-loss orders.

Projection Info

Forward projections using Monte Carlo simulations suggest a wide range of potential outcomes, with a median expected growth of 269.08%. Monte Carlo analysis uses historical data to simulate various future scenarios, offering a probabilistic view of potential returns. While these projections are informative, they rely on historical data and assumptions, which may not account for future market changes. To enhance predictive accuracy, regularly review and adjust your portfolio based on evolving market conditions and personal goals.

Asset classes Info

  • Stocks
    99%
  • Cash
    1%

The portfolio is heavily weighted towards stocks, accounting for over 99% of its composition. This concentration in equities suggests a focus on growth, but also introduces higher volatility. Diversifying into other asset classes, such as bonds or real estate, could reduce risk and provide more stability. A more balanced asset allocation can help protect against market downturns, offering a smoother investment journey. Consider your risk tolerance and investment horizon when deciding on the right mix of asset classes.

Sectors Info

  • Technology
    25%
  • Financials
    16%
  • Health Care
    11%
  • Industrials
    11%
  • Consumer Discretionary
    11%
  • Telecommunications
    8%
  • Consumer Staples
    6%
  • Energy
    4%
  • Basic Materials
    4%
  • Real Estate
    3%
  • Utilities
    3%

The sector allocation is fairly diversified, with significant exposure to technology, financial services, and healthcare. These sectors are known for their growth potential and can provide strong returns. However, the concentration in technology may increase volatility, given the sector's sensitivity to economic changes. To balance risk, consider allocating more to defensive sectors like consumer staples or utilities, which tend to perform well in downturns. Regularly review sector performance to ensure alignment with market trends and personal goals.

Regions Info

  • North America
    72%
  • Europe Developed
    12%
  • Asia Emerging
    5%
  • Japan
    5%
  • Asia Developed
    3%
  • Australasia
    2%
  • Africa/Middle East
    1%
  • Latin America
    1%

Geographically, the portfolio is predominantly exposed to North America, with limited international diversification. This heavy U.S. focus might benefit from the country's economic stability but also exposes the portfolio to regional risks. To diversify geographically, consider increasing exposure to emerging markets or other developed regions. This can help capture growth opportunities and reduce reliance on any single economy. Keep an eye on global economic developments to adjust geographic allocations as needed.

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.

Portfolio optimization using the Efficient Frontier suggests potential for improved risk-return balance. The Efficient Frontier is a concept that identifies the best possible return for a given level of risk. By adjusting the allocation between existing assets, you can potentially enhance returns without increasing risk. This doesn't necessarily mean adding new assets but rather reallocating within the current portfolio. Regularly review your portfolio's efficiency to ensure it remains aligned with your risk tolerance and investment goals.

Dividends Info

  • Vanguard Total Stock Market Index Fund ETF Shares 1.20%
  • Vanguard Total International Stock Index Fund ETF Shares 2.90%
  • Weighted yield (per year) 1.71%

The portfolio offers a total dividend yield of 1.71%, with the international ETF contributing a higher yield than its U.S. counterpart. Dividends can provide a steady income stream, especially in volatile markets. Reinvesting dividends can enhance compound growth over time. To increase dividend income, consider adding high-yield stocks or dividend-focused ETFs. Evaluate dividend sustainability and growth potential to ensure a reliable income source that aligns with your financial goals.

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) 0.04%

The portfolio's costs are impressively low, with a total expense ratio of 0.04%. Low costs are crucial for maximizing net returns over time, as they reduce the drag on performance. Vanguard ETFs are known for their cost-effectiveness, making them a popular choice for investors seeking to minimize expenses. Continuously monitor fees and consider switching to lower-cost options if available. Even small reductions in costs can significantly impact long-term returns, enhancing overall portfolio efficiency.

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