As a young investor, what should my portfolio look like?

Question

Consider that I am willing to take a few risks, looking for long term growth, and have a substantial amount to invest how should I structure my portfolio. I know there are many more factors involved but would like some sugestions. Thanks.

Answer 1

Concentrate on your retirement accounts

Answer 2

I believe the best way to go is perhaps the most boring. Index Funds. These track broad markets like the S&P 500. These broad markets, by definition, return the average return of all active investors, including mutual fund managers, and the added benefit is that the expense ratios are really low. Could be 0.10 percent compared with 1-2% with the active managers. That means you keep way more of your money.

For a young guy, I recommend that you buy index funds if you invest regularly, or ETFs if you do lump sums periodically. I can refer you to scottrade.com if you like, $7 trades, and we both get free trades for the referral.

Do this:

1/3 Large CAP, VV is an example
1/3 Mid/Small, VBR is an example ETF
1/3 International, VWO is an example ETF

https://flagship.vanguard.com/VGApp/hnw/FundsVIPERByType

But ONLY do this after you set aside an emergency fund to cover 3 months of expenses. Online savings accounts return 5% right now and are a great vehicle for this.

Hopefully this helps, post additional info or questions of you would like to continue the coversation.

Answer 3

Equities, as opposed to debt. Common stocks in good companies, or mutual funds. An important consideration is your income tax bracket; if it is high, you need to look for growth, while if it is not, stocks paying good dividends (I like Real Estate Investment Trusts) are a good bet. Put money into tax-deferred retirement accounts.

Answer 4

Assuming it is retirement, consider between 80-95% equities and 5-20% bonds. Rebalance often.

Answer 5

It should look like your best friend and that you have to take great care of it for the rest of your life......