How to Invest, Part 2. Investment Portfolios

Written by 
Tommy Syrmolotov
/
December 1, 2021

Answer: Samsung

Hover your cursor over the buildings and look at the connections between the companies
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Investment portfolios illustration - photo

Let’s say you have a hypothetical $1,000 to invest. Should you get stocks, bonds, ETFs? How much of each one. How much money should you keep in savings? Should you get crypto? Well, it depends on your goals, age, investment sum, risk tolerance and interests.

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Let’s look at some examples of portfolios. We’ll start with the more conservative ones and move on to the more risky, high-yield investments.

A word on bonds. They are the backbone of your investment portfolio, and the more conservative the portfolio is, the more you should allocate to bonds. Furthermore, some investors say you should keep the same percentage in bonds as your age for a smooth, low-risk retirement.

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6 Types of Investment Portfolios

Conservative

This is a low-risk and lower-yield portfolio. Half the money is in bonds, which bring a modest 3-4% annual yield, but there is very little chance anything can happen to it. Stocks and ETFs account for 25%, which keeps the portfolio growing. Another quarter is cash. Very liquid, very flexible. A good place to start before going for higher-risk portfolios.

Moderate

The next step after the conservative portfolio is to allocate more for stocks and ETFs and keep less in bonds and cash. The principle is the same as the conservative portfolio, but with somewhat higher risk and expected yield.

Moderately Aggressive

This is going into more aggressive territory. With half of the portfolio allocated for stocks and another 20% for ETFs, this leaves 20% in bonds and 10% in cash. A lot depends on the stocks we pick. Buying the right stock can make all the difference for the success of this portfolio.


Aggressive

This is a very bold portfolio with 95% of your money working. This also makes it more risky if you don’t pick the right stocks. Small-cap stocks have more growth potential, but it’s important to pick businesses you know and believe in. If you pick safe, blue-chip stocks, they will keep even an aggressive portfolio in check.


Conservative Crypto Enthusiast

Now we’re getting to crypto. Of course you can still invest in crypto with any of the previous portfolios, feel free to invest in crypto instead of stocks or even ETFs. But here we still have 45% in ETFs and stocks in addition to half in crypto. In case of a long crypto bear market, which can always happen, the investor may decide to invest part of the crypto money in stocks instead.


Pure Crypto Freak

Anonymous is going to the moon with Shiba and DeFi. This approach can make one very rich overnight. But crypto freaks can also lose everything flipping NFTs they sometimes have to continue flipping burgers in McDonalds.


Growth vs. Value Investment

Growth stocks (high P/E)

  • Likely to grow faster
  • Will fall first when economy slows down
  • Don’t pay dividends
  • AirBnb, Palantir

Value stocks (low P/E)

  • Will grow first after recession
  • Won’t grow as fast in a bull market
  • Pay dividends
  • Ford, JP Morgan

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because I want to check what my friend has just sent me
The company developed and maintains technological products and services, namely Snapchat, Spectacles, and Bitmoji. Snapchat is the third most popular app among millennials and gets high profits from ads on the platform. Since TikTok is not available to invest in yet, Facebook is boring, we see Snap as a good choice to diversify your portfolio. We don’t know what keeps those kids so glued to screens in Snapchat but if companies profit from it, we can get a share thanks to investing in their stocks.
because xBox brings us together with friends
Microsoft is the second biggest company on the market in terms of capitalization. Xbox, Skype, Windows Office 365 are all part of Microsoft business as well as it develops, licenses, and supports a wide range of software products and services, as well as designs and sells hardware. The company’s future is as bright as it’s past with all the money the company invests in disruptive tools like AI. Next time you plan to buy another game for the Xbox console, you might also consider buying a Microsoft stock which is not very expensive.
because we want schools to be cooler
So we packed peanut butter and jelly sandwiches for the kids, now it’s time to go to school. The K12 Inc. is an educational technology company. The company offers a private education program, software and education services built to teach online for preschool students up to grade 12 or K-12. The company’s earnings soared up after the pandemic because we came to realise that online learning is not far in the future and may continue the trend.
because we like to treat our pets and ourselves, too
The American manufacturer of supermarket food JM Smucker Co also operates a pet food business including brands such as Milk-Bone and Meow Mix. It’s also the producer of the peanut butter JIF, kid’s all-time favorite filling. The company offers a 2.96% dividend yield and in the third quarter reported a 7% increase in net sales.
because we love playing games
If there is one game to teach you financial literacy - it’s Monopoly, which belongs to Hasbro, as well as unparalleled portfolio of approximately 1,500 brands including MAGIC: THE GATHERING, NERF, MY LITTLE PONY, TRANSFORMERS, PLAY-DOH, BABY ALIVE, DUNGEONS & DRAGONS, POWER RANGERS, PEPPA PIG and PJ MASKS, as well as premier partner brands. The company generates strong cash flows and pays regular dividends. The company’s business moves along the online trend and develops digital content in the form of TV shows, films, computer games.
because everyone has a favorite childhood hero
Disney is a widely diversified company which owns everything from toys to apparel, and books to video games: Disney Parks, ESPN channel, Pixar, Hulu and so much more. And now it bets on streaming services with Disney+ and threatens Netflix’s market share. The company revenue suffered a major drop last year due to closure of Disneylands, but has opened them in October and foresees a strong comeback.
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