Portfolio 6 Update

In my May 8 post, Implementing Portfolio 5: A Current Example, I discussed a plan for a particular investor to migrate from a simple portfolio to a more complex portfolio (more asset classes). This is an update on the execution of that plan (you may want to scan the May 8 post before reading this post). Since the allocation is slightly different than Portfolio 5, I’m renaming this portfolio Portfolio 6. If you need a refresher on stock asset classes (e.g., large-cap, small-cap, growth, blend, value, international, etc.), please read my January 2010 post, Asset Allocation: Part 2.

Keep in mind that this is a fairly complex portfolio, and that the investor is taking a very active approach to building the portfolio. This approach probably is not suitable for most investors, but is being presented for those who might be interested in dealing with the additional complexity. The most important point is that the investor has made decisions on how to proceed, and is taking action to execute her plan.

Implementing Portfolio 5: A Current Example

The investor who currently is invested in Portfolio 1 [about 50% Vanguard Total Stock Market Index (US) and 50% in Vanguard Total International Stock Index (non-US)] has decided to diversify into a more complex asset allocation, along the lines of Portfolio 5 (see my April 25 post, Some Real Portfolios). Here are my thoughts on how to implement this change.

Portfolio 2: The rest of the story

In this post I conclude the story of portfolio 2. I review how the portfolio has performed, discuss some aspects of managing the portfolio, and talk a bit more about the asset allocation.

Portfolio 2: Genesis

In this post, we look at the genesis of Portfolio 2. This may be of interest to those of you who are currently relying on an investment firm or broker to manage your investments, and who are interested in moving to a lower cost, more efficient solution.

Portfolio 2 (simple, moderately conservative): the fixed-income story

In this post we start digging into Portfolio 2 (from my post Some Real Portfolios). There are several interesting aspects to this portfolio, so I'll use more than one post to discuss the portfolio. In this post, we focus primarily on the fixed-income portion of the portfolio. This is likely to be of more interest to retired investors, or investors who are investing for shorter term goals (less than 10 years).

Portfolio 1: Simple, aggressive, global equity

In this post, we explore Portfolio 1 from my post, Some Real Portfolios. This portfolio is extremely simple, consisting of only two Vanguard index funds:

• 50% Total Stock Market Index (US stocks)
• 50% Total International Stock Index (non-US stocks)

We might call this as an aggressive, global equity (stock) portfolio because it is 100% invested in stocks (no bonds -- very aggressive), and has a relatively high allocation to international (non-US) stocks (hence, global).  First, let's consider the investor's willingness, ability and need to take risk, and see how this portfolio fits.

Some Real Portfolios

I thought it might be helpful to discuss some real portfolios that I've been involved in developing. I'll start with the simplest portfolios, and then move to the more complex. The idea is to expose you to a variety of asset allocations, each having been designed based on the willingness, ability and need of the investor to take risk, along with ability and willingness to handle portfolio complexity.