Course 107: A Simple Portfolio
Build a Simple Portfolio
In this course
1 Introduction
2 Mutual Funds: The Simple Choice
3 Build a Simple Portfolio

Now let's build a diverse yet simple portfolio using Morningstar.com's Instant X-Ray.

Michael has $10,000 to invest. He wants to retire in 35 years.

After tinkering with his asset mix, Michael decides to be aggressive: he wants his asset allocation to be 0% bonds and cash, 70% large-cap U.S. stocks, 10% small-cap U.S. stocks, and 20% foreign stocks.

He decides to put $8,000 in Vanguard Total Stock Market VTSMX to cover the large- and small-cap allocations and $2,000 in American Funds EuroPacific Growth AEPGX to cover the foreign position.

You can enter Michael's portfolio into Morningstar.com's Instant X-Ray tool. After inserting the information, click "Show Instant X-Ray" at the bottom of the screen to see the results.

Given that Michael has many years until he draws on his portfolio, this mix looks good. It's diversified by investment style, with roughly three fourths of his assets in large-cap stocks and the rest in mid- and small-cap stocks. The portfolio isn't terribly overweight or underweight in a single sector, nor is it overexposed to one type of stock relative to the market.

Pretty simple, huh?

Next: The Quiz >>


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