Ketan Patel
10/6/2013
Portfolio Analysis
Portfolio Project Report
Professor Machuca
No matter what your age or investment goals, creating a diversified portfolio with different
short-term and long-term stocks is a key to reaching any goal. First, among many investing
strategies, diversification is necessary not to boost your portfolio performance because it
won’t ensure gains or guarantee against losses but it can help set the appropriate level of
risk for an investors time horizon, financial goals, and tolerance for portfolio volatility.
Second, creating and maintaining a strategic asset allocation technique is one of if not the
most important ingredients in our long-term investment success. It is better to take the time
to set a long-term mix of stocks, as well as short-term high yield dividend stocks. Once
setting these goals, make a regular checkup a normal part of a disciplined investment
process. At the very least, you should check your mix, otherwise known as asset allocation,
once a year or if your financial circumstances change significantly, for instance, if you lose
your job or get a big bonus.
One million dollars can be a lot of money for young investors and if handled well it’s
enough to let you retire to a modest lifestyle in the future. It is enough money to build a
foundation on which to build serious wealth for the future. However, $1 million is not
enough to let you get away with throwing your money away on bad investments. It is
important to know the goal of investing, for this money to last you the rest of your life, or
grow into a spectacular nest egg. A core principle is to treat $1 million the same way you
treated the first $1,000 you ever invested.
Dividend stocks are a huge part of a diversified portfolio. Companies that pay dividends
are usually stable, more mature businesses that can afford to share profits with
shareholders. Dividends serve as an important component of total return, accounting for
approximately 40% of U.S. stock market returns since 1930. Sustainable and growing
dividends help to hedge the income stream against inflation, to provide growing income to
investors without the need to sell shares. These firms generally have lower stock price
volatility while delivering attractive and superior returns (The pros’ guide).
Value investing will benefit a large part of my portfolio and dividend yields are a great
way to do that. The spread between treasury rates and dividend yields are at a high point
