How to Invest, Part 2. Investment Portfolios

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.

Download Gainy and get recommendations on specific securities for each asset type.

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