Designing your Own Portfolio

May 3, 2013

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My own Investment Portfolio: You wish to configure your Investible Securities for optimum

growth.

I should first assess the economic conditions. If they are favourable, then i look at the

capital market expections. Afterwards, i can select the optimal instruments.

I wish to match the available “optimal” instruments with my personal GOALS AND

OBJECTIVES. After i determine my own goals and objectives, i can design & build the

portfolio. The portfolio will have an “asset allocation” table ... that will guide “which money”

goes to “which instrument.”

To arrive at the Asset Allocation, i need to check

1. What are my medium-term goals, long-term goals

2. Whether i can take on risky assets.

Designing your Own Portfolio

May 3, 2013

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GOALS & Objectives

GOALS: to achieve growth & income, in my stock portfolio, and bond portfolio

Objectives: to achieve growth in the stock portfolio by long -term investing, in

fundamentally-sound stocks. I also would need a few stocks that pay good cash

dividends.

Objectives: to achieve growth in the bond portfolio by letting a fund manager

trade the bonds.

CONSTRAINTS:

Risk Tolerance: what instruments may, or may not, be used

Time Horizon (what segments can be invested for one year vs ten years)

Liquidity Needs: do i need the portfolio to generate interest, or cash div, for my

everyday expenses? If not, the portfolio can be focused on capital

gains—buy stocks that do not really give high cash div, but which have

great potential with regard to earnings & price gains.

Tax concerns: (any chances of tax savings...)

Legal & regulatory issues, if any

Unique needs and preferences, if any

3. My investment portfolio is the best combination of assets that will deliver good growth

over many year(s). Steps:

a. read the Economic conditions

b. check the Capital Market outlook, expected returns on stocks or bond funds

c. What instruments will do well, given this point in the economic cycle

4. Among the recommended instruments or investment vehicles, which ones are available

now, easy to access, and not overpriced? Let me get a good mix.

Survey of Available Instruments Expected

Return Volatility: plus or

minus __%

High-Dividend Stocks 8% 2%

High-Growth Stocks 30% 40%

Stocks with Steady & Stable Growth 15% 5%

Bonds, activily traded. 12% 3%

Bonds, high-yield 7% 2%

per year

Designing your Own Portfolio

May 3, 2013

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5- a. Asset Allocation –adjust the percent to personal taste.

Sample ... Asset Allocation Percent

High-Dividend Stocks 20 High-Growth Stocks 20

Stocks with Steady & Stable Growth 20 Bonds, actively traded. 20

Bonds, high-yield 20

example

5-b. Allocate investments to the winning industries.

Industry or Sector ...Allocation Percent

Real Estate 20

Energy 30

Food 20

Mining 15

Others 15 APPENDIX

Notes on economic outlook

Another view of my investment

portfolio, based on “sunrise industries”

.. the most promising performers over

the next five Years.

Keep adjusting the list, depending on

economic data on “fastest-growing

sectors.”

Designing your Own Portfolio

May 3, 2013

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Notes on capital market outlook: trends

a. Bonds

b. stocks. If the index stocks continue to grow at 15% a year, the index could reach 13,275

in five years’ time.

Example of Long-Term Strategy on an overpriced Stock Market Index

Designing your Own Portfolio

May 3, 2013

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Stocks seem overpriced compared to past level. But stocks today, could be cheap compared

to probable... future levels. The key is to make an investment in an unknown future, which

is probably going to be brighter than the past.

Example of a Short-Term Strategy, on an overpriced Stock Market

Example of Strategy, on the Cycles of an Individual Stock

Space for Notes on “my own portfolio” ...