Asset Allocation Portfolio Samples
Building a Portfolio of diversified investments is generally accomplished through a process known as Asset Allocation. This simply means investing in stocks, bonds, mutual funds, and/or cash according to your risk tolerance and investment time horizon.
See below for some sample portfolios that help you decide which portfolio is right for you given your goals.
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Aggressive Growth
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Best Year: 31.5%
Worst Year: -16.7%
Average Return: 9.3%
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What You Should Know
This portfolio is appropriate for investors with a long time horizon until retirement and a high tolerance for risk. This portfolio will experience higher-than-average volatility, but its higher expected returns should compensate over the long-term. The primary goal of investors using this asset mix is growth in the form of capital gains, as there is no need for current income. Investors in this category often expand their investments to include ETFs in other categories as well - real estate, commodities, and other funds may comprise small percentages of their asset mix. Click here for source data.
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Growth
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Best Year: 29.3%
Worst Year: -15.4%
Average Return: 8.9%
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What You Should Know
This sample portfolio is designed for investors without need of current income as well, but who may have less time until retirement and/or a lower appetite for risk. Investors in this category usually do not include the highest-risk asset categories, and have less invested in the higher-risk categories. Short-term volatility will still be experienced in this portfolio, but long-term results should compensate for this risk. Click here for source data.
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Balanced Growth & Income
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Best Year: 22.7%
Worst Year: -11.3%
Average Return: 7.8%
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What You Should Know
The following portfolio is appropriate for investors who place an equal emphasis on growth and current income. A shorter time horizon or conservative investment outlook may be the reasons for this approach, but the resulting portfolio should experience lower volatility and a correspondingly lower return. Click here for source data.
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Conservative Income
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Best Year: 16.4%
Worst Year: -7.2%
Average Return: 6.6%
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What You Should Know
A conservative income portfolio is designed for the preservation of capital. Investors who are extremely risk averse or who require current income with minimal risk will often take this approach. The risk of loss to principal assets is minimal, and volatility should remain low. Click here for source data.
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Once you've decided on an appropriate target portfolio, it's time to start investing. These portfolios can be easily constructed using Exchange Traded Funds (ETFs) in the appropriate asset classes. Additionally, there are ETFs that will allow you to expand your holdings beyond the "traditional" asset classes shown here, so don't feel constrained by these examples. And these strategies allow fully for investment in single stocks - just apply the percentage of funds invested in individual stocks to their appropriate investment category. Click here for more on investing in ETFs.
Once again, there are many tools available on the internet to help you build a well-diversified portfolio of ETFs.
Zecco Trading, Inc. is not a tax advisor. The Internal Revenue Service Code that governs IRAs is complex, and state tax laws regarding IRAs may differ as well. We recommend that you consult with a qualified tax advisor as you formulate your retirement planning needs.