A cautious portfolio with broad diversification and a focus on stable income and 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

Cautious Investors

This portfolio suits a cautious investor seeking a balance between growth and income, with a moderate risk tolerance. It prioritizes stability and regular income through dividends, while maintaining exposure to equities for growth potential. The broad diversification across asset classes and sectors aligns with a long-term investment horizon, ideal for individuals aiming to build wealth steadily over time. Such investors value capital preservation and are willing to accept limited risk for consistent returns.

Positions

  • Vanguard S&P 500 ETF
    VOO - US9229083632
    20.00%
  • Schwab U.S. Dividend Equity ETF
    SCHD - US8085247976
    15.00%
  • 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 Total Bond Market Index Fund ETF Shares
    BND - US9219378356
    10.00%
  • Realty Income Corp
    O - US7561091049
    10.00%
  • iShares® 0-3 Month Treasury Bond ETF
    SGOV - US46436E7186
    10.00%
  • SPDR® Gold Shares
    GLD - US78463V1070
    5.00%

This portfolio is composed of a mix of ETFs and common stock, with a significant allocation to equities at 75%, followed by cash, bonds, and other assets. The allocation is well-diversified, reflecting a cautious investment approach. Compared to typical benchmarks, this composition leans towards equities, which can offer growth potential. However, the inclusion of bonds and cash helps mitigate risk. For cautious investors, maintaining a balance between growth and stability is essential. Consider adjusting asset weights to align with changing market conditions, ensuring the portfolio remains balanced and aligned with your risk tolerance.

Growth Info

Historically, this portfolio has achieved a compound annual growth rate (CAGR) of 10.79%, with a maximum drawdown of 20%. This performance is impressive, especially given the cautious risk classification. The CAGR indicates strong growth over time, akin to a solid road trip speed. However, the drawdown highlights potential volatility. Comparing this to benchmarks, the portfolio has performed well, but past performance doesn't guarantee future results. To continue achieving favorable returns, periodically review asset performance and consider rebalancing to maintain desired risk levels.

Projection Info

A Monte Carlo simulation, which uses historical data to project potential outcomes, suggests a wide range of future returns. With 1,000 simulations, the portfolio's 5th percentile return is 40.81%, while the 67th percentile is 325.61%. This indicates potential for both conservative and optimistic outcomes. Although 989 simulations showed positive returns, it's crucial to remember that these projections are not guarantees. They provide a framework for understanding possible future scenarios. Regularly reassess your portfolio's alignment with financial goals and risk tolerance to navigate changing markets effectively.

Asset classes

  • Stocks
    75%
  • Cash
    11%
  • Bonds
    10%
  • Other
    5%
  • No data
    0%

The portfolio's allocation across asset classes is predominantly in stocks (75%), supplemented by cash, bonds, and other assets. This distribution aligns with a cautious investor's goal of balancing growth with stability. Compared to common benchmarks, the stock allocation is substantial, offering growth potential. However, maintaining a diversified mix of asset classes is vital for managing risk. Consider periodically reviewing asset class weights to ensure they align with your evolving investment goals and market conditions, potentially adjusting allocations to optimize risk-return balance.

Sectors

  • Technology
    15%
  • Real Estate
    11%
  • Financials
    11%
  • Health Care
    8%
  • Consumer Discretionary
    7%
  • Industrials
    7%
  • Consumer Staples
    5%
  • Telecommunications
    5%
  • Energy
    4%
  • Basic Materials
    2%
  • Utilities
    1%

Sector allocation in this portfolio is diversified, with notable exposure to technology, real estate, and financial services. This distribution aligns closely with benchmark norms, indicating a balanced approach. However, the technology sector's prominence may introduce higher volatility, especially during interest rate changes. Diversification across sectors helps mitigate sector-specific risks and capture opportunities across different economic cycles. Regularly review sector weights to ensure they reflect your risk tolerance and market outlook, potentially rebalancing to maintain a diversified and resilient portfolio.

Regions

  • North America
    61%
  • 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 heavily weighted towards North America, comprising 61% of the allocation. This concentration aligns with benchmarks but may limit exposure to international growth opportunities. While North America offers stability, diversifying across regions can reduce geopolitical risks and capture global growth. Consider increasing exposure to underrepresented areas, such as emerging markets, to enhance diversification and potential returns. Regularly assess geographic allocations to ensure they align with your investment strategy and risk tolerance.

Redundant positions

  • Vanguard S&P 500 ETF
    Vanguard Total Stock Market Index Fund ETF Shares
    High correlation

The portfolio contains highly correlated assets, particularly the Vanguard S&P 500 ETF and the Vanguard Total Stock Market Index Fund ETF Shares. High correlation means these assets tend to move together, limiting diversification benefits during market downturns. Diversification aims to reduce risk by including assets that behave differently. Consider replacing one of the correlated assets with a less correlated alternative to enhance diversification. Regularly review asset correlations and adjust holdings to maintain a balanced and resilient portfolio.

Dividends

  • Vanguard Total Bond Market Index Fund ETF Shares 3.60%
  • Realty Income Corp 5.90%
  • Schwab U.S. Dividend Equity ETF 3.70%
  • iShares® 0-3 Month Treasury Bond ETF 4.70%
  • Vanguard S&P 500 ETF 0.90%
  • Vanguard Total Stock Market Index Fund ETF Shares 1.30%
  • Vanguard Total International Stock Index Fund ETF Shares 1.60%
  • Weighted yield (per year) 2.59%

The portfolio's overall dividend yield is 2.59%, with significant contributions from Realty Income Corp and Schwab U.S. Dividend Equity ETF. Dividends provide a steady income stream, appealing to cautious investors seeking regular cash flow. High yields can enhance total returns, especially in low-interest-rate environments. However, focusing solely on dividends may limit growth potential. Ensure your portfolio strikes a balance between income and growth by periodically reviewing dividend yields and adjusting holdings to align with your income needs and investment goals.

Ongoing product costs

  • Vanguard Total Bond Market Index Fund ETF Shares 0.03%
  • SPDR® Gold Shares 0.40%
  • Schwab U.S. Dividend Equity ETF 0.06%
  • iShares® 0-3 Month Treasury Bond ETF 0.07%
  • 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%
  • Weighted costs total (per year) 0.06%

Portfolio costs are impressively low, with a total expense ratio (TER) of 0.06%. Low costs support better long-term performance by reducing the drag on returns. Compared to industry averages, these costs are competitive, reflecting a cost-efficient investment strategy. It's crucial to monitor and minimize costs, as even small differences can compound over time. Regularly review fund expenses and consider replacing high-fee assets with lower-cost alternatives to enhance your portfolio's cost efficiency and long-term growth potential.

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.

The portfolio could benefit from optimization using the Efficient Frontier, which seeks the best possible risk-return ratio. Currently, highly correlated assets may limit diversification. By removing these overlaps and reallocating within existing assets, you can achieve a more efficient portfolio. Optimization focuses on maximizing returns for a given risk level, not necessarily increasing diversification. Regularly assess and adjust asset allocations to maintain an efficient portfolio that aligns with your risk tolerance and investment objectives.

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