Investment Portfolio
Client B
Age: 15
Funds: $10,000
Stocks (100%)
50% Growth Market Exposure
We recommend our client allocate 50% of their equity towards growth market ETFs. This will allow our client to reap high growth returns, but also have diversification that ETFs provide.
Individual Stocks (20%)
General Market Exposure (30%)
Growth Stocks
We would recommend the client to allocate 30% of their equity towards broad large-cap Index ETFs which would give our client predictable long-term growth.
FNILX (Fidelity Zero Large Cap Index), VOO (Vanguard S&P 500), QQQ (Invesco QQQ Trust) are three examples of ETFs we recommend that would give our client broad large-cap exposure at low expense ratios.
Growth ETFs will provide our client with diversification as well as exposure to high growth.
Sector ETFs provide diversification in industries that are due for major growth in the future. Information Technology, FinTech, and Artificial Intelligence relitively new and growing sectors we recommend.
Emerging Market ETFs are a good way to diversify into international growth markets. We especially recommend China due to it's large population and potential for growth.
Bond (0%)
VGT (Vanguard Information Technology ETF), AIQ (Global X FinTech ETF), Global X Artificial Intelligence & Tech ETF) are three examples of ETFs in high growth industries of the future.
The average annual return of the stock market is 9%. If this individual invests all $10,000 into stocks the expected return would be $36,425 by the age of 30.
Value Stocks
We recommend our client devote about 50% of her individual stock allocation on growth stocks. This is risky, but because of her age her portfolio should be built towards growth and a high allocation towards growth stocks encompasses that idea.
We have designed a portfolio with allocations that are expected to outperform the average market return.
Other Investment Options
We recommend our client invest in companies in the industries of the future. Examples of these industries are FinTech, Electric Vehicles, and Artificial Intelligence.
Cryptocurrencies
Our client should consider investing in cryptocurrencies in the future when they have more assets at their disposal. At the moment, our client does not have enough assets to properly diversify in this sector.
General Motors, PayPal, and Microsoft are examples of major players in these industries that boast consensus buy ratings on MarketBeat.
With the other half of their individual stock exposure, our client should allocate it towards companies with a history of growing dividend returns. This would provide predictable growing income and help to hedge against the risk of growth stocks.
Coca-Cola, McDonald's, and Lowe's are a few viable options.
FXI (iShares China Large-Cap ETF), VWO (Vanguard Emerging Markets ETF), SPEM (SPDR Emerging Markets ETF) are a few examples of Emerging market ETFs we recommend.
VUG (Vanguard Growth ETF, VOOG (Vanguard S&P 500 Growth ETF), SPYG (SPDR S&P 500 Growth ETF) are some examples of low expense ratio high growth ETFs.
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Due to the clients age and their goal of growth. We determined that bonds are not viewed as an ideal investment option at this time.
According to Vanguard, the average annual return on portfolios allocated 100% to bonds is 10.2%, which is greater than the average annual returns of any of the portfolios with any bond allocation.