My personal investment portfolio matters to decide
1. Designing your Own Portfolio
May 3, 2013
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My own Investment Portfolio: You wish to configure your Investible Securities for optimum
growth.
I should first assess the economic conditions. If they are favourable, then i look at the
capital market expections. Afterwards, i can select the optimal instruments.
I wish to match the available “optimal” instruments with my personal GOALS AND
OBJECTIVES. After i determine my own goals and objectives, i can design & build the
portfolio. The portfolio will have an “asset allocation” table ... that will guide “which money”
goes to “which instrument.”
To arrive at the Asset Allocation, i need to check
1. What are my medium-term goals, long-term goals
2. Whether i can take on risky assets.
2. Designing your Own Portfolio
May 3, 2013
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GOALS & Objectives
GOALS: to achieve growth & income, in my stock portfolio, and bond portfolio
Objectives: to achieve growth in the stock portfolio by long-term investing, in
fundamentally-sound stocks. I also would need a few stocks that pay good cash
dividends.
Objectives: to achieve growth in the bond portfolio by letting a fund manager
trade the bonds.
CONSTRAINTS:
Risk Tolerance: what instruments may, or may not, be used
Time Horizon (what segments can be invested for one year vs ten years)
Liquidity Needs: do i need the portfolio to generate interest, or cash div, for my
everyday expenses? If not, the portfolio can be focused on capital
gains—buy stocks that do not really give high cash div, but which have
great potential with regard to earnings & price gains.
Tax concerns: (any chances of tax savings...)
Legal & regulatory issues, if any
Unique needs and preferences, if any
3. My investment portfolio is the best combination of assets that will deliver good growth
over many year(s). Steps:
a. read the Economic conditions
b. check the Capital Market outlook, expected returns on stocks or bond funds
c. What instruments will do well, given this point in the economic cycle
4. Among the recommended instruments or investment vehicles, which ones are available
now, easy to access, and not overpriced? Let me get a good mix.
Survey of Available Instruments
Expected
Return
Volatility: plus or
minus __%
High-Dividend Stocks 8% 2%
High-Growth Stocks 30% 40%
Stocks with Steady & Stable Growth 15% 5%
Bonds, activily traded. 12% 3%
Bonds, high-yield 7% 2%
per year
3. Designing your Own Portfolio
May 3, 2013
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5- a. Asset Allocation –adjust the percent to personal taste.
Sample ... Asset Allocation Percent
High-Dividend Stocks 20
High-Growth Stocks 20
Stocks with Steady & Stable Growth 20
Bonds, actively traded. 20
Bonds, high-yield 20
example
5-b. Allocate investments to the winning industries.
Industry or Sector ...Allocation Percent
Real Estate 20
Energy 30
Food 20
Mining 15
Others 15
APPENDIX
Notes on economic outlook
Another view of my investment
portfolio, based on “sunrise industries”
.. the most promising performers over
the next five Years.
Keep adjusting the list, depending on
economic data on “fastest-growing
sectors.”
4. Designing your Own Portfolio
May 3, 2013
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Notes on capital market outlook: trends
a. Bonds
b. stocks. If the index stocks continue to grow at 15% a year, the index could reach 13,275
in five years’ time.
Example of Long-Term Strategy on an overpriced Stock Market Index
5. Designing your Own Portfolio
May 3, 2013
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Stocks seem overpriced compared to past level. But stocks today, could be cheap compared
to probable... future levels. The key is to make an investment in an unknown future, which
is probably going to be brighter than the past.
Example of a Short-Term Strategy, on an overpriced Stock Market
Example of Strategy, on the Cycles of an Individual Stock
Space for Notes on “my own portfolio” ...