I designed my ideal portfolio
I think my portfolio is quite diversified already, never the less I keep day dreaming about my ideal portfolio everyday. I don’t think investing in only about 10 stocks would be smart, I agree that your first ideas are the best ones but a little more diversification would be solid in my eyes. This is why I came up with a plan:
My brokerage account will be split in 60% core stocks, 20% other stocks, 15% ETF’s and 5% bonds.
As you can see my core holdings will be, Pepsico, Visa, Starbucks, Nike, Apple, Disney, Microsoft, Unilever, Johnson&Johnson, 3M, Boeing and Realty Income. Below you can see the diversification by sector, now keep in mind this is just for 60% of the total brokerage account.
Reasoning for these 12 stocks are that in my view these are the most sustainable companies, I’m not sure about the long term future of oil companies, so I won’t make them a core position. Based on this logic I came up with the 12 companies which to me seem to have the best current numbers and the brightest future. It’s a great mix of companies with 40+ years of dividend growth history, and on the other side you have companies which just started paying dividends 5-10 years ago, but are believed to be the future Dividend Aristocrats and Kings. Dividend Aristocrats is a name for a list of stocks which have increased their dividend at least 25 years in a row. Dividend Kings is the same thing, just for 50+ years of dividend growth. These stocks are the cherry on top of any cake!
The 20% of ‘Other stocks’ will be decided by Mr. Market, if he gives me an opportunity I will take it and spread it out nicely along with other stocks. I have no real indication of how much stocks will fit this 20%.
Althought ETF’s (Exchange Traded Funds) may not increase their dividend pay out like clockwork every year, I still think the ones with low fees and a broad diversification in certain sectors are worth adding to your portfolio. Because I’m a huge believer in A.I. and Robotics for the future I will make sure to include such an ETF. Furthermore I’m looking at a broad Europe and Emerging Markets ETF to nicely diversify around the globe. I must admit, I have been thinking about a China ETF, but as of today I am not yet convinced to include this in my ‘Ideal Portfolio’, this might change later though.
What’s left are the bonds, currently I have little knowledge about bonds, this has to improve. But at some point I want to include bonds in my investments, currently I’m thinking about a broad ‘Triple A’ bond fund. Bonds from the safest countries and companies are a welcome defensive part of any portfolio, although they will not really grow they are incredibly stable (when purchased from stable countries at least). This makes them no priority for me as I am only 22 and am currently better of focussing on growing stocks and dividends.
These statistics and calculations are mostly guidelines, it will be near impossible to keep everything at exactly 5% obviously, ideas and companies can change and so will my ideal portfolio.
What is your ideal portfolio?
I challenge everyone to create their own ideal template and share it with the community. For sure this will add value for everyone and hopefully we can have great discussions about all the diversification and stock picks!
Thank you for reading!