How to balance one s portfolio so as to get a yield of 15-20 % annually.?

Question

I am a retired person. Kindly advise accordingly

Answer 1

There's a huge exponential jump in risk going from 10 to 15% annualized return. With the market as jumpy as it is now, I certainly would not consider taking that risk with my retirement money.

With a fairly conservative portfolio of ...

60% fixed income averaging 5%
25% international and value mutual funds averaging 15% 15% of your portfolio in individual stocks averaging 20%

Your averge ROI would be just under 10%, which isn't too bad considering the low risk and market conditions. When the market corrects, then you could rebalance for increased ROI.
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Answer 2

You could try investing in good quality stocks that have dividends around 4%. Then you could sell Covered Call Options on your Investments and this would get you about an addition 3% every 4 months. So that would give you around 13%. If the stock also rises another 2% a year you could hit your target of 15%, but you would almost have to be ready to buy your stock back when your stock got exercised to cover the call.

It can be done and it is a daily job. You still need to spread your risk across 10 stocks to do well, and know that in a turndown of the market you will loose your ability to sell the Calls without taking losses when you are exercised.

There is no free lunch. Over the long haul a good portfolio of 40% bonds and 60% stocks will likely result in a 9-10% return. With a short time line, it will more likely be around 5% as we are about to get a correction in the stock market. Only time and compounding will get you out of this, and I think that shooting for 15%, your risk level will be so high that you will end up loosing it all.

Answer 3

A portfolio returning 15 to 20% annually will not be a balanced portfolio. And for a retired person it would be very risky. It can be done but most likely not regularly. More likely you would pick up those kinds of returns for one, two, or possibly 3 years; but during the 4th year suffer a drop of about 30%. There would be much less risk shooting for 8% to 10%.

But if you do have the stomach for the risk, search among the small cap stocks. And select those that have potential of growing that amount annually for the next 5 years. There are plenty of them out there with the potential. Also search among the foreign developing markets specifically China. There are a few there also.

But if you do decide to take that path, better be well diversified with at least 20 different companies because I guarantee that at least 10% of them will suffer drastically.

Answer 4

You are a retired person. Sir I would advise that you do research and find good dividend yielding companies that give you 10-12 % yield and the rest of it can be made up captial apprecaition from your equity investment.
Two birds in one stone your investments are inflation proofed since equities in the long run say 15-20 year horizon fetch you 10% and the dividends will add up the rest.
Please take care to reinvest the dividends to increase your over all yields.
Please also take care to scrutinize the balance sheets of the company very closely to see that it matches your risk profile

Answer 5

That would be a very risky thing to do if you're retired. You would have to have 100% in stocks, and no one really recommends that for someone who is retired. There is no guarantee that the market will return more than 10% from now on. You would need to have heavy weighting in small-cap and emerging market stocks, either through mutual funds or individual stocks, and I wouldn't recommend that for someone who is retired. An allocation of 75% in stocks with an estimated annual return of 10% would be best.

Answer 6

Well, the first thing would be to educate yourself on trading, because buying is pretty easy. Selling can be the hard part.

Read something like How to Make Money in stocks in good times and bad by William O'Neil (found easily just about everywhere) to give you a primer.

Once you do, you'll see that there really is a way to outperform the market, through education. Regular users of IBD's investors.com aren't smiling because their stocks suck. lol

Anyways, learn how to select and evaluate stocks, then learn how/when to buy/sell them. This is very important because w/o practice and knowledge, you're more likely to lose money like the masses, rather than reap benefits of having a discplined approach.

That said, back to your original question. I'm not sure I can shoot that low, but here's a suggestion.

Buy DIA, AAPL, CROX, POT, and MRO or NOV. Set a stop 3% below the price. When the stocks get up 25%, sell. That way, you'll get your 20%.

(And as a reminder, always do your own research first!)

Hope that helps!
6/17/07

Answer 7

First of all, NEVER EVER put your money in "small or mid-cap" stocks AT ALL, as there the returns maybe Phenomenal but once the market crashes, they take years to recover.
Secondly, the irony is that stock market is the only Place where 15% is possible also, IF AND ONLY IF you invest in LARGE CAP. stocks like RIL, REL. CAP, or RPL. etc.
Safest among these is RPL, the moment the refinery starts this will give 50% return in one year from now FOR SURE. Ask any any one who is into stocks. (So, 15% is almost a guaranty here.)
Next, REL.CAP. is applying for Banking license. The moment they get it (and it's a matter of time only), 15% from here in one year is a SURE BET.
Lastly, for RIL, the target for short term itself is 2000/-, so 15% is sure there too.
And these are all safe cos.
Only thing is, invest for 1 yr. min. Don't panic if market crashes, as they are large cos. so will recover equally fast. Don't be greedy then, the moment you get your 15-20%get out. Invest equally in all the 3 cos. so that your risk (if any) is divided. And lastly if you have 10 lacs. to spare, invest only 5 lacs. for the intended 15% return directly in stocks. Put a bit in Reliance vision mutual fund also. This will also give you 15% easily in one year.
SO ENJOY YOUR GAINS, as the large cos. grow...

Answer 8

As per the current trend, the stocks that will fetch you 15-20% every quarter will be the following sectors:
Power (25%), Banks(25%), Software(25%), Metals (15%) and Media (10%).

Try investing in the above sectors as indicated.

Answer 9

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Answer 10

you can make a portfolio by making use of risk reduction technique and non linear programming problem