A conservative portfolio emphasizing income through dividends and bonds with limited equity exposure

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

Conservative Investors

This portfolio is suitable for a conservative investor seeking stable income with low risk. It prioritizes dividend and bond income over capital appreciation, making it ideal for individuals nearing retirement or those with a low tolerance for volatility. The focus on large-cap stocks and high-quality bonds aligns with a strategy that values capital preservation. With a long-term horizon, this investor can benefit from steady income streams while maintaining a diversified portfolio that mitigates market fluctuations.

Positions

  • Schwab International Dividend Equity ETF
    SCHY - US8085246721
    39.84%
  • Schwab Long-Term U.S. Treasury ETF
    SCHQ - US8085246804
    38.02%
  • Fidelity® Total Bond ETF
    FBND - US3161883091
    17.87%
  • Apple Inc
    AAPL - US0378331005
    1.90%
  • NVIDIA Corporation
    NVDA - US67066G1040
    1.67%
  • The Charles Schwab Family of Funds - Schwab Municipal Money Fund
    SWTXX
    0.70%

The portfolio is composed of a mix of ETFs, common stocks, and a money fund, with a significant focus on income-generating assets. The Schwab International Dividend Equity ETF and Schwab Long-Term U.S. Treasury ETF form the core, comprising over 75% of the total allocation. This heavy emphasis on dividend and bond ETFs aligns with a conservative strategy, aiming to provide steady income while minimizing volatility. Compared to a benchmark of a typical conservative portfolio, this allocation is well-positioned to offer stability. Consider diversifying further into other asset classes or sectors to enhance risk-adjusted returns.

Warning Historical data is limited for this portfolio, which reduces the confidence in the calculated values.

Growth Info

Historically, the portfolio has delivered a Compound Annual Growth Rate (CAGR) of 4.91%, with a maximum drawdown of -11.59%. For context, a hypothetical $10,000 investment would have grown to approximately $15,950 over a decade. While the returns are modest, they align with the conservative risk profile, prioritizing capital preservation over aggressive growth. The portfolio's performance is slightly below the average for conservative portfolios, which typically target a CAGR of around 5-6%. To improve performance, consider reassessing asset allocations or exploring higher-yielding opportunities.

Warning Due to limited historical data, this may show extreme values that are not realistic.

Projection Info

Monte Carlo simulations, which use historical data to forecast potential future outcomes, indicate a wide range of possible returns. The median scenario projects a 1,040.9% return, while the worst-case scenario shows a 161.2% return. With 996 out of 1,000 simulations yielding positive returns, the portfolio's robustness is evident. However, it's important to remember that these projections are not guarantees, as they rely on historical trends that may not repeat. To enhance future performance, consider rebalancing periodically to maintain alignment with your risk tolerance and investment goals.

Asset classes Info

  • Bonds
    56%
  • Stocks
    43%
  • Cash
    1%
  • No data
    0%

The portfolio is primarily allocated to bonds (56%) and stocks (43%), with a minimal cash position. This allocation reflects a conservative approach, prioritizing income stability over growth. Compared to typical benchmarks, the portfolio's bond allocation is higher, providing a cushion against equity market volatility. The stock allocation offers some growth potential, albeit limited. To further optimize, consider increasing exposure to alternative asset classes that may offer uncorrelated returns, potentially boosting overall performance without significantly increasing risk.

Sectors Info

  • Consumer Staples
    6%
  • Financials
    6%
  • Telecommunications
    5%
  • Health Care
    5%
  • Industrials
    5%
  • Technology
    5%
  • Basic Materials
    3%
  • Energy
    3%
  • Consumer Discretionary
    3%
  • Utilities
    3%
  • Real Estate
    0%

The sector allocation is well-diversified, with no single sector dominating the portfolio. Consumer Defensive, Financial Services, Communication Services, and Healthcare each account for around 5-6% of the total allocation. This balanced approach helps mitigate sector-specific risks and aligns with best practices in diversification. However, the absence of Real Estate exposure may limit the potential for income and capital appreciation in that sector. Consider adding a small allocation to Real Estate to capture potential growth opportunities and enhance diversification.

Regions Info

  • Europe Developed
    24%
  • North America
    5%
  • Australasia
    5%
  • Asia Emerging
    3%
  • Japan
    2%
  • Africa/Middle East
    2%
  • Asia Developed
    2%
  • Latin America
    1%

Geographically, the portfolio is predominantly invested in Europe Developed (24%), with limited exposure to North America (5%) and other regions. This allocation offers some diversification benefits but may expose the portfolio to region-specific risks. Compared to global benchmarks, the portfolio is underweight in North American equities, which have historically been strong performers. To reduce geographic concentration risk, consider increasing exposure to North American markets or other underrepresented regions, such as Asia or Latin America, to capture growth potential.

Market capitalization Info

  • Mega-cap
    22%
  • Large-cap
    15%
  • Mid-cap
    4%
  • Small-cap
    0%
  • Micro-cap
    0%

The portfolio's market capitalization exposure is concentrated in mega-cap stocks (22%) and big-cap stocks (15%), with minimal exposure to medium, small, or micro-cap companies. This concentration in larger companies aligns with a conservative strategy, as mega and big-cap stocks tend to offer stability and lower volatility. However, this approach may limit the potential for outsized returns often associated with smaller companies. To enhance diversification and growth potential, consider increasing exposure to medium or small-cap stocks, which may provide higher returns over the long term.

Dividends Info

  • Apple Inc 0.50%
  • Fidelity® Total Bond ETF 3.50%
  • Schwab Long-Term U.S. Treasury ETF 3.00%
  • Schwab International Dividend Equity ETF 3.60%
  • The Charles Schwab Family of Funds - Schwab Municipal Money Fund 1.80%
  • Weighted yield (per year) 3.22%

The portfolio's dividend yield is 3.22%, with contributions from various holdings such as the Schwab International Dividend Equity ETF and Schwab Long-Term U.S. Treasury ETF. Dividends play a crucial role in generating steady income, especially for conservative investors prioritizing income over capital gains. The yield is competitive compared to other conservative portfolios, which typically aim for a 3-4% yield. To maintain or increase this income stream, consider reinvesting dividends or exploring additional high-yield opportunities that align with your risk tolerance and investment objectives.

Ongoing product costs Info

  • Fidelity® Total Bond ETF 0.36%
  • Schwab Long-Term U.S. Treasury ETF 0.03%
  • Schwab International Dividend Equity ETF 0.14%
  • Weighted costs total (per year) 0.13%

The portfolio's Total Expense Ratio (TER) is 0.13%, indicating low costs that support better long-term performance. The Schwab Long-Term U.S. Treasury ETF, with a TER of 0.03%, is particularly cost-effective. Minimizing costs is crucial, as high fees can erode returns over time. This portfolio's cost structure is well-aligned with best practices, offering a strong foundation for achieving investment goals. To further optimize, periodically review the TERs of individual holdings and explore cost-effective alternatives if necessary, ensuring that costs remain in check.

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's risk-return profile can be optimized using the Efficient Frontier, a concept that identifies the best possible risk-return ratio. Currently, the portfolio's expected return is below the optimal level of 5.79%. By adjusting the allocation between existing assets, it's possible to achieve a more efficient portfolio without increasing risk. This optimization focuses on maximizing returns for the given risk level, rather than diversification. Regularly reassess your holdings and make necessary adjustments to ensure the portfolio remains aligned with your financial goals.

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