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:

Brokerage diversification:

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.

And here is the chart showing which of these stocks are growth stocks or the more stable mature companies which have paid dividends for a incredibly long time already.

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!

Happy investing!

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5 Comments

  1. Nice blogpost, love it. Like you I’m also aiming for a ‘core’ portfolio. Although my plan is to hold 30 core holdings. And then maybe a few smaller holdings depending on opportunities create by Mr. Market. This should give me enough diversification and roughly average market returns to not need index funds.

    Personally, I’m not really interested in bonds at the moment. I’m only 24 years old, so I’ll worry about bonds when I’m 60. Until then I’m 100% stocks :). But I can understand why you would like some bonds.

    – SD

    • DutchIndependence

      Hey SD, I agree we are too young to start with bonds, I’m just putting it out there as an option when I get way older. I’d love to have some one day, but this will not be a priority for a long time.
      Your diversification plan sounds great as well, I’m just wondering in general where the crossover point is when it starts being easier/better to just buy ETF’s instead of more and more diversification while picking each stock yourself. Can’t wait to see what the future holds for us!
      Thanks for the comment!

      DI

  2. MH

    Thank you for sharing your well developed portfolio. Impressed with the reasoning behind many of your stock selections. As I recently retired my focus is dividend paying stocks , with 0 bond exposure.I do have some Pimco cef’s average yield in excess of 10% . We have many stocks in common , I will be adding to mmm, PepsiCo on down days. Like to swing trade mu recently, I feel it has limited downside risk in the near term. Holding C and JPM , considering DB at seemingly attractive price. Thoughts?

  3. You designed it like an engineer 🙂 Especially during the first few years it will be very difficult to meet your goal as every single purchase can amend the weight of the particular stock by a few percent. The idea is good though and just by aiming your goal you will end up with a well balanced portfolio.

    I also wouldn’t worry about bonds if I were you. During the wealth accumulation phase anything between 0-20% is fine. I’m aiming 10%, but it’s only my personal taste 🙂

    • DutchIndependence

      Thanks Roadrunner, I think of these guidelines as a path to follow, but it’s not the only route and for sure I will not limit myself to these stocks and percentages. Bonds are something for the long term, I won’t bother with those for a while yet.
      Thanks for your comment!

      DI

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