Your SlideShare is downloading. ×
How to Build an Investment Portfolio
Upcoming SlideShare
Loading in...5
×

Thanks for flagging this SlideShare!

Oops! An error has occurred.

×
Saving this for later? Get the SlideShare app to save on your phone or tablet. Read anywhere, anytime – even offline.
Text the download link to your phone
Standard text messaging rates apply

How to Build an Investment Portfolio

305
views

Published on

Published in: Economy & Finance, Business

0 Comments
1 Like
Statistics
Notes
  • Be the first to comment

No Downloads
Views
Total Views
305
On Slideshare
0
From Embeds
0
Number of Embeds
1
Actions
Shares
0
Downloads
13
Comments
0
Likes
1
Embeds 0
No embeds

Report content
Flagged as inappropriate Flag as inappropriate
Flag as inappropriate

Select your reason for flagging this presentation as inappropriate.

Cancel
No notes for slide

Transcript

  • 1. Finding Your Way Through the Maze of Investing How To Build Your Portfolio: Insights into Amway RSP Stock Funds
  • 2. How To Build Your PortfolioOur goal is to provide youwith an understanding ofhow to manage portfoliorisks – the most importantaspect of an effectiveportfolio.
  • 3. How To Build Your PortfolioPortfolio:a collection of investmentsheld by an institution or a Mutualprivate individual Fund C Mutual Fund B Mutual Fund A
  • 4. How To Build Your Portfolio• RISK: the potential that a chosen action or activity (including the choice of inaction) will lead to a loss (an undesirable outcome).
  • 5. How To Build Your Portfolio• RISK: the potential that a chosen action or activity (including the choice of inaction) will lead to a loss (an undesirable outcome). – All investments are risky – Combining different investments can increase or decrease overall risk – You cannot manage returns; you CAN manage risk
  • 6. How To Build Your PortfolioCorrelation: The measure of how two securitiesmove in relation to each other. 0 -1 Negative Positive +1
  • 7. How To Build Your PortfolioCorrelation:The measure of howtwo securities movein relation to eachother.
  • 8. How To Build Your PortfolioAsset Class: Asset ClassesA group of securities that exhibitsimilar characteristics, behavesimilarly in the marketplace, andare subject to the same laws and Cash Stocksregulations.• Stocks• Bonds Bonds• Cash
  • 9. How To Build Your Portfolio Asset Classes• Asset Allocation across the asset classes will reduce positive correlation Cash Stocks Bonds
  • 10. How To Build Your Portfolio• Systematic Risk – Market Risk – Cannot be eliminated – Eg. Recession, war, elections• Unsystematic Risk – Specific risk – Can be reduced/eliminated – Eg. Worker strike, bankruptcy, supply chain interruption
  • 11. How to Build Your PortfolioAsset Classes have Categories• Stocks – Domestic • Large Cap Domestic Intl Stocks Stocks • Mid Cap Cash • Small Cap – International Chocolate US • Large Cap Treasury Corp Bonds • Emerging Nations Bonds• Bonds – US Treasury Bonds other • 10 year • 30 year • TIPS Diversification: – US Corporate Bonds Mix a variety of investments across the Asset • Investment Grade Class Categories to eliminate unsystematic risk • High Yield – International Bonds
  • 12. How To Build Your Portfolio70%20%10%
  • 13. How To Build Your Portfolio
  • 14. How To Build Your Portfolio Value Blend Growth Spartan 500 Mainstay Large Cap Alps/WMC Vanguard T Rowe Price Health Care New Era Vanguard Mid Morgan Cap Index Hotchkis & Stanley Mid Cap Wiley American Century Real Baron Growth Estate Vanguard Neuberger Small Cap Berman Small Cap Index Genesis
  • 15. How To Build Your PortfolioPortfolioconstruction:Methods• At one extreme is the “returns chaser”
  • 16. How To Build Your Portfolio• At other extreme is the professional investment manager
  • 17. How To Build Your Portfolio • Your method should be in-between
  • 18. How To Build Your Portfolio• Create and follow a Asset Classes personal asset allocation policy• eg. – Stocks : 45-65% Cash Stocks – Bonds : 30-50% – Cash : 5-15% Bonds
  • 19. How To Build Your Portfolio• Identify your personal risk profile: how sensitive are you to losing money? 20% 60% 100% Conservative Aggressive Moderate https://personal.vanguard.com/us/FundsInvQuestionnaire
  • 20. How To Build Your PortfolioAnd decide how much risk you can accept for your assets Conservative Investors Best Returns Worst Returns (20% Stock) One Month 4.29% One Month -4.91% Three Months 6.73% Three Months -3.37% One Year 13.85% One Year -3.06% Moderate Investors Best Returns Worst Returns (60% Stock) One Month 8.24% One Month -13.63% Three Months 14.23% Three Months -12.71% One Year 27.18% One Year -24.75% Aggressive Investors Best Returns Worst Returns (100% Stock) One Month 14.25% One Month -22.51% Three Months 23.34% Three Months -24.05% One Year 41.27% One Year -40.69%
  • 21. How To Build Your Portfolio• Create and follow a Asset Classes personal asset allocation policy• Identify Asset Allocation triggers (see Monitoring Cash Stocks the Market seminar) Bonds
  • 22. How to Build Your Portfolio• Create and follow a personal asset Domestic Intl Stocks allocation policy Stocks Cash• Identify Asset US Chocolate Allocation triggers Corp Treasury Bonds (see Monitoring the Bonds Market seminar) other• Reduce Diversification: unsystematic risk Mix a variety of investments across the Asset Class Categories to eliminate unsystematic risk through diversification
  • 23. How To Build Your Portfolio Value Blend Growth Spartan 500 Mainstay 70% Large Cap Alps/WMC Vanguard Health Care T Rowe Price New Era Vanguard Mid Morgan Cap Index Hotchkis & Stanley 20% Mid Cap Wiley American Century Real Baron Growth Estate Vanguard Neuberger 10% Small Cap Small Cap Index Berman Genesis
  • 24. How To Build Your Portfolio
  • 25. How To Build Your Portfolio
  • 26. How To Build Your Portfolio
  • 27. How To Build Your Portfolio• Summary – Match your personal risk preferences • Conservative, Moderate, Aggressive – Manage risk exposure by combination of investments • Asset Allocation • Diversification – Closet indexing – investing the size and styles as they are represented in market; mimicking the market – Know each fund’s risk and how it will effect the portfolio • Max & Min return swing – Monitor - Triggers for adjusting allocation
  • 28. How To Build Your PortfolioNEVER forget your focus! – Retirement is your end- game • Retirement goals – Focus on longer term • Investment horizon – Stick with your Basic Plan • An Investment Policy Statement helps you remember
  • 29. Thank You Schedule your personal consultation now! Visit http://amway.bemanaged.comContact us at (616) 871-0751 or (888) 738-8780 Large Cap Mid Cap Small Cap
  • 30. How To Build Your PortfolioPortfolio construction• Wait. Why a portfolio? Why not just 1 great fund?
  • 31. How To Build Your PortfolioCommon sense tells us that your likelihood of experiencingloss is greater if you are invested in just 1 fund.
  • 32. How To Build Your Portfolio Large Cap Mid Cap Small Cap

×