A balanced portfolio with a strong focus on US equities and low-cost index funds

Report created on Jan 12, 2025

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 heavily weighted towards US equities, with 90% allocated to the Schwab Total Stock Market Index Fund. This leaves a modest 10% exposure to international markets via the Schwab International Index Fund. While this composition aligns with a balanced risk profile, it leans heavily towards domestic stocks, which may limit global diversification. Consider increasing international exposure to enhance diversification and potentially capture growth in other markets.

Growth Info

Historically, the portfolio has demonstrated a strong compound annual growth rate (CAGR) of 12.76%, significantly outperforming many benchmarks. However, it has also experienced a maximum drawdown of -34.79%, indicating substantial volatility during downturns. This performance suggests robust growth potential but also highlights the importance of having a risk management strategy in place to handle market fluctuations.

Projection Info

Monte Carlo simulations provide a range of possible future outcomes based on historical data, with this portfolio showing an annualized return of 10.75%. The 5th percentile projects a 17.54% return, while the median (50th percentile) suggests a 248.2% return. These projections highlight potential growth but also remind us that past performance is not a guarantee of future results, and the portfolio could still face risks.

Asset classes Info

  • Stocks
    100%

The portfolio is predominantly composed of stocks, accounting for over 99% of the allocation. This concentration in equities suggests a focus on growth but also introduces higher volatility. Including more asset classes such as bonds or real estate could provide a buffer against market swings and improve risk-adjusted returns. Diversifying across asset classes is a key strategy for managing risk in a balanced portfolio.

Sectors Info

  • Technology
    29%
  • Financials
    15%
  • Health Care
    11%
  • Consumer Discretionary
    11%
  • Industrials
    10%
  • Telecommunications
    8%
  • Consumer Staples
    6%
  • Energy
    4%
  • Real Estate
    3%
  • Basic Materials
    3%
  • Utilities
    3%

Sector allocation is tech-heavy, with technology comprising nearly 29% of the portfolio. This aligns with current market trends but may increase volatility, especially during interest rate hikes. Other sectors like financial services and healthcare provide balance but are underrepresented. Diversifying further across sectors could reduce risk and enhance portfolio stability, especially if tech experiences a downturn.

Regions Info

  • North America
    89%
  • Europe Developed
    7%
  • Japan
    2%
  • Australasia
    1%

The portfolio's geographic exposure is predominantly in North America, accounting for over 89% of the allocation. This heavy domestic focus may limit the benefits of geographic diversification. Increasing allocations to emerging markets or other developed regions could provide exposure to different economic cycles and growth opportunities, potentially enhancing portfolio resilience.

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 aims to achieve the best possible risk-return ratio. This involves adjusting the current asset allocation to maximize returns for a given level of risk. However, it's important to note that this optimization is based solely on the current assets and does not account for other investment goals such as diversification.

Ongoing product costs Info

  • SCHWAB INTERNATIONAL INDEX FUND SELECT SHARES 0.06%
  • SCHWAB TOTAL STOCK MARKET INDEX FUND SELECT SHARES 0.03%
  • Weighted costs total (per year) 0.03%

The portfolio benefits from impressively low costs, with a total expense ratio (TER) of just 0.03%. This cost efficiency supports better long-term performance by minimizing the drag on returns. Maintaining low costs is crucial for maximizing net returns, and this portfolio is well-aligned with best practices in cost management.

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