Growth Focused Portfolio with High Risk and Moderate Diversification Needs Refinement for Better Balance

Report created on Dec 5, 2024

Risk profile Info

5/7
Growth
Less risk More risk

Diversification profile Info

3/5
Moderately Diversified
Less diversification More diversification

Positions

The portfolio is heavily weighted towards stocks, with 50% in the Vanguard Total Stock Market Index Fund ETF and 20% in NVIDIA. This composition indicates a strong preference for growth through equities. While ETFs provide diversification, the concentration in individual stocks like NVIDIA and Roblox increases risk. A more balanced approach could involve diversifying across different asset classes, such as bonds, to reduce volatility. This would provide a cushion against market downturns while maintaining growth potential. Consider assessing the portfolio's alignment with long-term goals to ensure it meets future financial needs.

Growth Info

Historically, the portfolio has demonstrated impressive performance with a CAGR of 30.85%. This indicates robust growth, driven primarily by the significant allocation to high-performing stocks. However, the max drawdown of -45.54% suggests vulnerability to market swings. Understanding these metrics is crucial as they reflect both the potential for high returns and the associated risks. To sustain growth while mitigating risks, consider implementing strategies that reduce drawdown impact, such as diversifying across more stable sectors or incorporating defensive assets.

Projection Info

Using a Monte Carlo simulation, this portfolio shows promising future outcomes with a 50th percentile return of 3,378.25%. This simulation uses random sampling to predict potential returns, offering a statistical insight into future performance. While the results are optimistic, with most simulations yielding positive returns, it's essential to remember that projections are not guarantees. To enhance future returns and manage risk, consider regularly reviewing and adjusting the portfolio in response to market changes and personal financial goals.

Asset classes Info

  • Stocks
    100%

The portfolio is almost entirely composed of stocks, representing 99.74% of asset allocation. This heavy stock concentration suggests a high-risk profile, aiming for significant capital appreciation. While stocks can offer substantial returns, they also come with increased volatility. For a more balanced risk-reward ratio, consider incorporating other asset classes like bonds or real estate. This can help stabilize returns and provide income during market downturns, creating a more resilient investment strategy.

Sectors Info

  • Technology
    37%
  • Telecommunications
    15%
  • Consumer Staples
    13%
  • Financials
    9%
  • Health Care
    7%
  • Consumer Discretionary
    6%
  • Industrials
    6%
  • Energy
    2%
  • Basic Materials
    2%
  • Real Estate
    2%
  • Utilities
    2%

Sector allocation is dominated by technology at 36.68%, followed by communication services and consumer defensive. This concentration in tech indicates a bet on growth industries, which can be lucrative but also volatile. Diversifying into other sectors, such as healthcare or utilities, could offer more stability and reduce sector-specific risks. A well-rounded sector allocation can help mitigate the impact of downturns in any single industry, supporting consistent portfolio performance over time.

Regions Info

  • North America
    91%
  • Europe Developed
    4%
  • Asia Emerging
    2%
  • Japan
    2%
  • Asia Developed
    1%
  • Australasia
    1%

Geographically, the portfolio is overwhelmingly concentrated in North America at 90.54%. This focus suggests a strong belief in the American market's growth potential. However, geographic diversification can reduce regional risk and capture growth opportunities in emerging markets. Consider expanding exposure to regions like Asia or Europe to enhance diversification. This approach can provide a hedge against economic fluctuations in a single region, contributing to a more robust global investment strategy.

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 opportunities for improvement by adjusting the risk-return balance along the efficient frontier. Moving towards a more conservative allocation involves increasing exposure to lower-risk assets like bonds. Conversely, a riskier portfolio could further concentrate on high-growth equities. However, given the current risk classification, optimizing for better diversification and reduced volatility should be a priority. This approach can enhance the portfolio's resilience and align more closely with the investor's financial objectives.

Dividends Info

  • Costco Wholesale Corp 2.00%
  • Vanguard Total Stock Market Index Fund ETF Shares 1.20%
  • Vanguard Total International Stock Index Fund ETF Shares 2.90%
  • Weighted yield (per year) 1.09%

The portfolio's total dividend yield is relatively low at 1.09%, with contributions from Costco, Vanguard Total Stock Market, and International Stock Index Fund ETFs. While dividends are not the primary focus, they can provide a steady income stream and contribute to total returns. For investors seeking income, increasing exposure to dividend-paying stocks or funds could enhance cash flow. Balancing growth and income-generating assets can create a more comprehensive investment strategy that caters to diverse 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) 0.02%

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