Balanced Risk Portfolio with Broad Diversification and Strong Dividend Focus for Long-Term Growth

Risk profile

  • Secure
    Speculative

The risk profile, derived from past market volatility, reflects the level of risk the portfolio is exposed to. This assessment helps align your investments with your financial goals and comfort with market fluctuations.

Diversification profile

  • Focused
    Diversified

The diversification assessment evaluates the spread of investments across asset classes, regions, and sectors. This ensures a balanced mix, reducing risk and maximizing returns by not concentrating in any single area.

What type of investor this portfolio is suitable for

Balanced Investors

This portfolio is suitable for investors who are balanced in their risk tolerance, seeking both growth and income. Typically, these investors have a moderate risk appetite and a long-term investment horizon. They value diversification and are comfortable with a significant equity exposure, aiming for capital appreciation and dividend income. These investors are likely focused on achieving steady growth while managing market volatility. They appreciate the benefits of a low-cost, diversified portfolio and are committed to a disciplined investment strategy. This approach aligns with their financial goals and risk preferences.

Positions

  • Vanguard S&P 500 ETF
    VOO - US9229083632
    45.00%
  • Vanguard Total Stock Market Index Fund ETF Shares
    VTI - US9229087690
    15.00%
  • Vanguard Total International Stock Index Fund ETF Shares
    VXUS - US9219097683
    15.00%
  • Vanguard High Dividend Yield Index Fund ETF Shares
    VYM - US9219464065
    15.00%
  • Schwab U.S. Dividend Equity ETF
    SCHD - US8085247976
    10.00%

The portfolio is composed mainly of ETFs, providing broad exposure to various markets. With a strong focus on U.S. equities, the portfolio includes a mix of large-cap stocks and dividend-focused funds. This composition offers a balance between growth potential and income generation. A significant portion is allocated to the S&P 500 and total stock market, ensuring exposure to a wide range of companies. The inclusion of international stocks and dividend-focused ETFs helps diversify risk and enhance potential returns. Maintaining this diversified approach is crucial to achieving long-term financial goals while managing risk effectively.

Growth

Historically, the portfolio has shown a commendable performance with a compound annual growth rate (CAGR) of 11.39%. This indicates a strong return on investment over time, despite a maximum drawdown of -34.12%. The concentrated days that make up 90% of the returns suggest that the portfolio benefits from occasional market surges. Understanding historical performance helps in setting realistic expectations for future returns. It is essential to remain patient during market downturns and focus on the long-term growth potential. Regularly reviewing the portfolio's performance against personal financial goals can ensure it remains on track.

Projection

Using a Monte Carlo simulation, the portfolio's future performance was projected with 1,000 simulations. This method provides a range of possible outcomes by simulating various market conditions. The median outcome suggests a potential growth of 311.82%, with a high probability of positive returns. While these projections are not guarantees, they offer a helpful perspective on potential risks and rewards. Keeping a long-term perspective and being prepared for volatility is crucial. Regularly reassessing the portfolio's alignment with personal risk tolerance and investment goals can help in making informed decisions.

Asset classes

  • Stocks
    100%
  • Cash
    0%
  • Other
    0%
  • No data
    0%

The portfolio is heavily weighted towards stocks, making up 99.66% of the total asset allocation. This high equity exposure aligns with a balanced risk profile, aiming for growth through capital appreciation. A small allocation to cash and other assets provides minimal diversification outside of equities. Understanding the asset class distribution is important for managing risk and expected returns. To mitigate risk, consider incorporating more fixed-income securities or other asset classes. This can help balance the portfolio, especially during periods of market volatility, and provide more consistent returns over time.

Sectors

  • Technology
    24%
  • Financials
    16%
  • Health Care
    11%
  • Consumer Discretionary
    10%
  • Industrials
    10%
  • Consumer Staples
    8%
  • Telecommunications
    7%
  • Energy
    5%
  • Utilities
    3%
  • Basic Materials
    3%
  • Real Estate
    2%

The sector allocation is diverse, with a substantial focus on technology and financial services. This distribution provides exposure to high-growth sectors while maintaining balance across other industries like healthcare and consumer goods. Such diversity reduces the risk of overexposure to any single sector. A well-diversified sector allocation can help stabilize returns and protect against sector-specific downturns. Continuously monitoring sector performance and adjusting allocations as necessary can ensure the portfolio remains aligned with market trends and personal investment goals. This proactive approach can enhance long-term portfolio performance.

Regions

  • North America
    86%
  • Europe Developed
    6%
  • Asia Emerging
    2%
  • Japan
    2%
  • Asia Developed
    2%
  • Australasia
    1%
  • Africa/Middle East
    1%
  • Latin America
    0%
  • Europe Emerging
    0%

Geographically, the portfolio is predominantly invested in North America, with 85.51% of assets allocated there. This focus provides exposure to a stable and mature market but limits exposure to international growth opportunities. A small portion is invested in developed and emerging markets, offering some diversification. Geographic diversification is vital for managing risk and capitalizing on global growth. Consider increasing exposure to international markets to enhance diversification. This can help mitigate regional risks and tap into growth potential in other parts of the world, contributing to a more balanced global investment strategy.

Redundant positions

  • Vanguard S&P 500 ETF
    Vanguard High Dividend Yield Index Fund ETF Shares
    Vanguard Total Stock Market Index Fund ETF Shares
    Schwab U.S. Dividend Equity ETF
    High correlation

The portfolio's assets show high correlation, particularly among U.S. equity-focused ETFs. This means they tend to move in the same direction, which can amplify both gains and losses. Understanding asset correlations is crucial for managing risk and ensuring diversification. High correlation can limit the portfolio's ability to weather market volatility. To reduce correlation, consider diversifying into asset classes or investments that have historically moved differently. This can help smooth out returns and provide more stability during market fluctuations, enhancing the overall resilience of the portfolio.

Dividends

  • Schwab U.S. Dividend Equity ETF 3.40%
  • Vanguard S&P 500 ETF 1.20%
  • Vanguard Total Stock Market Index Fund ETF Shares 1.30%
  • Vanguard Total International Stock Index Fund ETF Shares 3.00%
  • Vanguard High Dividend Yield Index Fund ETF Shares 2.80%
  • Weighted yield (per year) 1.94%

The portfolio offers a respectable dividend yield of 1.94%, with contributions from dividend-focused ETFs. This yield provides a steady income stream, complementing capital appreciation. Dividends can play a crucial role in total returns, particularly during volatile market periods. Focusing on dividend-paying investments can enhance cash flow and provide a buffer against market downturns. Regularly reviewing the dividend yield and assessing its contribution to overall returns can help maintain a balanced approach. This can ensure that the portfolio continues to meet income needs while supporting long-term growth objectives.

Ongoing product costs

  • Schwab U.S. Dividend Equity ETF 0.06%
  • Vanguard S&P 500 ETF 0.03%
  • Vanguard Total Stock Market Index Fund ETF Shares 0.03%
  • Vanguard Total International Stock Index Fund ETF Shares 0.08%
  • Vanguard High Dividend Yield Index Fund ETF Shares 0.06%
  • Weighted costs total (per year) 0.04%

The portfolio's costs are impressively low, with a total expense ratio (TER) of 0.04%. Low costs are essential for maximizing net returns over time, as they reduce the drag on performance. Keeping expenses in check is a fundamental principle of sound investing. By maintaining a low-cost structure, the portfolio is well-positioned to achieve its financial goals. Regularly reviewing and managing investment costs can help optimize returns. This focus on cost efficiency should be maintained, ensuring that expenses do not erode the portfolio's growth potential over the long term.

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