You want an investment portfolio that meets your financial objectives.
Investors have obvious goals: to produce wealth and to preserve capital.
You also want that portfolio to accomplish those goals quietly, with a minimum of upsets, a minimum of nerves, a minimum of complex mathematics, and most likely, a reasonable amount of effort on your part, because you are busy doing other things in life too.
The tiered portfolio is divided into three primary tiers:
1. The Foundation portfolio
2. The Rotational portfolio
3. The Opportunistic portfolio.
The Foundation portfolio (80%)
This is set up to meet or slightly beat expected market returns, often with stable and somewhat defensive investments.
Dividend-paying stocks with rising dividends and growing prospects while at the same time exhibiting low downside risk and volatility are a pretty good fit.
These investments can be stocks or funds, and can be augmented by fixed-income securities, real estate, or other investments that meet this general profile.
Rotational (10%) and Opportunistic (10%) portfolio
The purpose of these is to achieve better-than-market returns, perhaps with more volatility, but these portfolios are small enough to contain risk and to avoid consuming too much of your investing time and bandwidth.
Putting together your portfolio
How your portfolio is put together is entirely up to you, not only because the portfolio needs to suit your tastes, intuitions and the facts at the time, but also because many of the investments (and the mix of investments) may not even be available, or priced right, at the time.
Investors have obvious goals: to produce wealth and to preserve capital.
You also want that portfolio to accomplish those goals quietly, with a minimum of upsets, a minimum of nerves, a minimum of complex mathematics, and most likely, a reasonable amount of effort on your part, because you are busy doing other things in life too.
The tiered portfolio is divided into three primary tiers:
1. The Foundation portfolio
2. The Rotational portfolio
3. The Opportunistic portfolio.
The Foundation portfolio (80%)
This is set up to meet or slightly beat expected market returns, often with stable and somewhat defensive investments.
Dividend-paying stocks with rising dividends and growing prospects while at the same time exhibiting low downside risk and volatility are a pretty good fit.
These investments can be stocks or funds, and can be augmented by fixed-income securities, real estate, or other investments that meet this general profile.
Rotational (10%) and Opportunistic (10%) portfolio
The purpose of these is to achieve better-than-market returns, perhaps with more volatility, but these portfolios are small enough to contain risk and to avoid consuming too much of your investing time and bandwidth.
Putting together your portfolio
How your portfolio is put together is entirely up to you, not only because the portfolio needs to suit your tastes, intuitions and the facts at the time, but also because many of the investments (and the mix of investments) may not even be available, or priced right, at the time.
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