Balanced Portfolio with Broad Diversification and Solid Growth Potential for Steady Long-Term Gains

Report created on Aug 11, 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 composed of five ETFs, each contributing an equal 20% allocation, resulting in a balanced and diversified mix. This composition ensures exposure to a wide range of asset classes and sectors, reducing the risk associated with individual investments. By holding a variety of ETFs, the portfolio benefits from diversification, which can help mitigate losses in volatile markets. To maintain this balance, it's essential to regularly review the allocation and make adjustments as needed to align with changing market conditions and personal investment goals.

Growth Info

Historically, the portfolio has demonstrated strong performance, with a compound annual growth rate (CAGR) of 15.48%. This indicates the portfolio's ability to generate significant returns over time. However, it's important to note the maximum drawdown of -23.49%, which highlights the potential for substantial losses during market downturns. To manage this risk, consider maintaining a diversified mix of investments and staying committed to your long-term strategy. Keep in mind that past performance is not indicative of future results, so it's crucial to remain vigilant and adaptable in your investment approach.

Projection Info

A Monte Carlo simulation, which uses random sampling to model potential future outcomes, projects a range of possible portfolio values. With a hypothetical initial investment, the simulation shows a median return of 581.01% and an annualized return of 16.16%. This suggests a strong potential for growth, but it's important to remember that these are estimates and actual results may vary. To capitalize on this potential, maintain a diversified portfolio and stay informed about market trends. Regularly reassess your risk tolerance and investment goals to ensure your portfolio remains aligned with your financial objectives.

Asset classes Info

  • Stocks
    100%

The portfolio is heavily weighted towards stocks, with 99.6% of assets in this class. This allocation provides significant growth potential but also exposes the portfolio to higher volatility. A small percentage is held in cash and other assets, offering limited diversification. To reduce risk, consider incorporating additional asset classes, such as bonds or alternative investments, which can provide stability during market fluctuations. This approach can help balance the portfolio's risk and return profile, ensuring it remains aligned with your long-term investment strategy and risk tolerance.

Sectors Info

  • Technology
    22%
  • Financials
    17%
  • Consumer Discretionary
    12%
  • Industrials
    12%
  • Health Care
    9%
  • Telecommunications
    7%
  • Energy
    7%
  • Consumer Staples
    7%
  • Basic Materials
    4%
  • Utilities
    1%
  • Real Estate
    1%

The portfolio is well-diversified across various sectors, with significant allocations in technology, financial services, and consumer cyclicals. This diversification helps mitigate sector-specific risks and provides exposure to different economic cycles. However, it's essential to monitor sector performance and adjust allocations as needed to capitalize on emerging trends and minimize potential losses. By maintaining a balanced sector allocation, the portfolio can better withstand market fluctuations and continue to deliver consistent returns over time.

Regions Info

  • North America
    80%
  • Europe Developed
    8%
  • Asia Emerging
    3%
  • Japan
    3%
  • Asia Developed
    2%
  • Australasia
    1%
  • Latin America
    1%
  • Africa/Middle East
    1%

Geographically, the portfolio is predominantly focused on North America, with 80.4% of assets allocated to this region. While this concentration offers exposure to a stable and developed market, it may limit potential growth opportunities in other regions. To enhance diversification, consider increasing allocations to emerging markets or other international regions. This approach can help capture growth in developing economies and reduce the portfolio's reliance on a single geographic area, ultimately contributing to a more balanced and resilient 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 is already well-diversified and balanced, making it a strong foundation for long-term growth. However, there's potential for optimization by adjusting the asset allocation along the efficient frontier. By shifting towards bonds or alternative investments, you can create a more conservative portfolio with reduced volatility. Conversely, increasing exposure to equities can enhance growth potential but may also raise risk levels. Before making any changes, ensure that your investment strategy aligns with your risk tolerance and financial objectives, and consider consulting a financial advisor for personalized guidance.

Dividends Info

  • Avantis® U.S. Small Cap Value ETF 1.50%
  • Invesco NASDAQ 100 ETF 0.60%
  • Schwab U.S. Dividend Equity ETF 3.30%
  • Vanguard Total Stock Market Index Fund ETF Shares 1.30%
  • Vanguard Total International Stock Index Fund ETF Shares 3.00%
  • Weighted yield (per year) 1.94%

The portfolio offers a respectable dividend yield of 1.94%, providing a steady income stream in addition to capital appreciation. This yield is primarily driven by the Schwab U.S. Dividend Equity ETF and the Vanguard Total International Stock Index Fund. Dividends can be an essential component of total returns, especially during periods of market volatility. To optimize income generation, consider reinvesting dividends or allocating a portion of the portfolio to higher-yielding assets. This approach can help enhance overall returns and contribute to long-term wealth accumulation.

Ongoing product costs Info

  • Avantis® U.S. Small Cap Value ETF 0.25%
  • Invesco NASDAQ 100 ETF 0.15%
  • Schwab U.S. Dividend Equity ETF 0.06%
  • 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) 0.11%

With a total expense ratio (TER) of 0.11%, the portfolio is cost-effective, minimizing the impact of fees on overall returns. Low costs are crucial for maximizing gains, as they can significantly affect long-term performance. To maintain this cost advantage, consider regularly reviewing the expense ratios of your investments and exploring lower-cost alternatives if available. Staying mindful of fees and expenses is an essential aspect of successful investing, ensuring that more of your returns are retained and contributing to your financial goals.

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