DIY Model Portfolio

 

This “DIY Model Portfolio” is just meant to illustrate a potential method of allocating an investment fund.  It’s not to be taken as personalized investment advice as I make no recommendations to buy, sell, or hold any securities or trading strategies.

 

This DIY Model Portfolio will be updated monthly.  It is a simple investment strategy involving a 60% allocation in a low cost index fund and a 40% allocation in our proprietary VTS TACTICAL VOLATILITY STRATEGY.  We have a mountain of data that illustrates value of index funds for the average investor, and when you add in our successful VTS Tactical Volatility strategy the results can be quite impressive.

 

60% VBINX  –  An index fund of 60% equities and 40% bonds  (click here for info)

40% in our VTS Tactical Volatility Strategy

 

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* Results include all trade fees, all ETF holding fees, and are adjusted for dividends.
* Performance on a hypothetical 25,000$ start value and using daily closing ETF prices.

 

Since the VBINX has both equities and bond holdings within it, here is the final breakdown of the DIY Model Portfolio’s allocations:

  • 36% Equities
  • 24% Bonds
  • 40% Volatility Trading Strategies

 

Here are some advantages to this portfolio allocation as I see it.  Again this is not personalized investment advice.  I’m just illustrating an example of an investment fund people could easily manage on their own.

 

  • Diversification  –  Equities and Bonds traditionally pair well together because of how they move in relation to each other.  Equities have historically performed better, but they are more volatile as well so the bonds allocation adds stability and smooths out returns in the long run.  When we also add a volatility trading strategy to the mix that isn’t correlated to either equities or bonds it adds yet another level of safety, but also provides a strong boost to the overall returns.

 

  • Low management expense ratio  –  One of the larger drags to a portfolios long term results are management fees.  This is one of the reasons why traditional portfolio managers have such a difficult time beating the market.  The VBINX is a low cost index fund with an expense ratio of just 0.23%.  My Volatility Trading Strategies monthly subscription is just 50$ per month.  When combined it forms a high performing portfolio with overall lower fees.

 

  • Removes the psychology of trading  –  One of the major challenges facing investors is fighting the urge to make emotional decisions.  It can be a real challenge staying the course, especially when things aren’t going well in the short run.  Trading index funds and adding to them over time on a fixed schedule, and trading volatility products based on signals from me removes the emotions of trading.

 

  • Ease of management  –  The VBINX index fund portion of the portfolio can be purchased and then added to on a set schedule, for example twice per year which involves almost no work at all.  The Volatility Trading Strategies allocation can be traded easily as well with a long term average of just 3 trades per month.  In total the time involved in managing a portfolio of this type might end up being a few hours per year and anybody including inexperienced traders can easily handle it.

 

  • Bull and bear market viable  –  The VBINX index fund portion of the portfolio will almost certainly decline during bear markets, but the volatility trading strategy portion has proven to be quite successful in navigating and profiting from market declines.  This means the portfolio has the potential to continue higher regardless of what the overall markets are doing.

 

  • Impressive returns  –   As always past results are not necessarily indicative of future performance, but over the course of the last 5 years this portfolio would have returned an impressive 30%+ per year on average.


 

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