Balanced Diversified Portfolio with Strong Historical Performance and Moderate Risk Level

Report created on Dec 5, 2024

Risk profile Info

4/7
Balanced
Less risk More risk

Diversification profile Info

4/5
Broadly Diversified
Less diversification More diversification

Positions

The portfolio is heavily weighted towards ETFs with a small allocation to a single common stock. This composition indicates a preference for diversified, passive investment strategies, which can help mitigate risk and provide steady returns. The inclusion of a common stock adds a slight tilt towards potential high growth, albeit with increased volatility. Maintaining such a composition can be beneficial for achieving broad market exposure while still having a chance for higher returns through individual stock performance.

Growth Info

Historically, the portfolio has performed well, with a compound annual growth rate (CAGR) of 13.01% and a maximum drawdown of -25.81%. This suggests that while the portfolio has experienced significant growth, it has also faced notable periods of decline. Understanding past performance helps set realistic expectations for future returns and volatility. To sustain this growth trajectory, continuous monitoring and periodic rebalancing can help manage risk and capitalize on growth opportunities.

Projection Info

Using a Monte Carlo simulation, which forecasts potential outcomes by simulating numerous scenarios, the portfolio shows promising future performance. With a hypothetical initial investment, the median projection is a 379.48% increase, while the 5th percentile suggests a potential -40.35% loss. This range highlights the inherent uncertainty in investing, emphasizing the importance of aligning investment strategies with risk tolerance. Regularly reviewing and adjusting the portfolio based on changing market conditions and personal circumstances is advisable.

Asset classes Info

  • Stocks
    100%

The portfolio's asset class allocation is predominantly in stocks, with minimal exposure to cash and other asset classes. This stock-heavy allocation aligns with a moderate to high-risk tolerance, aiming for capital appreciation. While equities can offer substantial long-term growth, they also come with increased volatility. To reduce risk, consider incorporating more bonds or alternative asset classes, which can provide stability and diversification against market fluctuations.

Sectors Info

  • Technology
    24%
  • Financials
    16%
  • Industrials
    13%
  • Consumer Discretionary
    11%
  • Health Care
    10%
  • Telecommunications
    7%
  • Consumer Staples
    7%
  • Energy
    5%
  • Basic Materials
    3%
  • Utilities
    2%
  • Real Estate
    2%

The sector allocation is well-diversified, with technology, financial services, and industrials being the top sectors. This diversification across multiple sectors can help mitigate sector-specific risks and take advantage of different market cycles. However, technology's high weighting may increase vulnerability to tech-specific downturns. Regularly reviewing sector allocations and making adjustments to avoid overexposure to any single sector can further enhance risk management.

Regions Info

  • North America
    78%
  • Asia Emerging
    8%
  • Europe Developed
    5%
  • Asia Developed
    3%
  • Japan
    2%
  • Africa/Middle East
    2%
  • Latin America
    1%
  • Australasia
    1%

The geographic composition is heavily skewed towards North America, with limited exposure to other regions. This concentration may limit the portfolio's ability to benefit from global growth opportunities. While North American markets have been strong performers, diversifying geographically can reduce region-specific risks and improve overall portfolio resilience. Consider gradually increasing exposure to international markets to achieve a more balanced global allocation.

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 optimization chart suggests that the current allocation is reasonably efficient but could be fine-tuned for better risk-adjusted returns. Moving along the efficient frontier, the portfolio can become riskier by increasing equity exposure or more conservative by adding bonds. However, before optimizing, it's crucial to ensure the portfolio aligns with the investor's risk tolerance and financial goals. Focus on balancing risk and return to achieve a suitable investment strategy.

Dividends Info

  • Invesco NASDAQ 100 ETF 0.60%
  • Schwab U.S. Dividend Equity ETF 3.40%
  • Schwab Emerging Markets Equity ETF 3.00%
  • Vanguard Total Stock Market Index Fund ETF Shares 1.20%
  • Vanguard Total International Stock Index Fund ETF Shares 2.90%
  • Weighted yield (per year) 1.88%

The portfolio's dividend yield stands at 1.88%, with the Schwab U.S. Dividend Equity ETF contributing significantly at 3.4%. Dividends provide a steady income stream and can add a layer of stability to the portfolio. Focusing on dividend-paying investments can be beneficial for investors seeking regular income alongside capital appreciation. To optimize dividend income, consider reinvesting dividends and exploring additional high-yield opportunities that align with the overall investment strategy.

Ongoing product costs Info

  • Invesco NASDAQ 100 ETF 0.15%
  • Schwab U.S. Dividend Equity ETF 0.06%
  • Schwab Emerging Markets Equity ETF 0.11%
  • 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%

Portfolio costs are relatively low, with a total expense ratio (TER) of 0.05%. Keeping costs low is crucial as they can eat into returns over time. The low TER suggests efficient fund selection, contributing to better net returns. Continuously monitoring and minimizing investment costs, such as management fees and transaction costs, is essential for maximizing long-term growth. Opting for low-cost index funds and ETFs can further enhance cost-efficiency.

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