Portfolio Report Card: A Smartly Built $1.2 Million Investment Account

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Trick question: What does the optimal investment portfolio look like? Do you know?

For example, is it the portfolio with the best performing 5-star rated fund managers of yesteryear? Is it the investment account that holds the hottest stocks (NasdaqGS:NFLX) or ETFs (NasdaqGM:IBB) of the moment? Is it the portfolio built with impressive risk-adjusted back-tested historical results? Is it the portfolio with the lowest fees (NYSEARCA:SCHB)?

In my latest video titled, A $1.2 Million Portfolio Built Like a Rock , I do a Portfolio Report Card for 51-year old J.P. from Virginia. Does he get an A, B, C, D, or F? His portfolio consists of a $547,568 taxable account with TD Ameritrade , $596,538 in a Fidelity 401(k) plan, and $84,827 in a self-managed Roth IRA also with TD. Most of J.P.'s money is invested in ETFs like the iShares Russell 1000 (NYSEARCA:IWB), iShares Russell 2000 (NYSEARCA:IWM), and the iShares MSCI EAFE (NYSEARCA:EFA) along with a few actively managed funds.


Portfolio Chart 1

What are the 5 attributes of an optimal portfolio?

In my analysis of J.P.'s portfolio, I drop a few enormous clues (five of them to be exact) as to what the precise attributes of an optimally designed investment portfolio are. Can you name them?

Another Portfolio Report Card that I just completed was for a 45-year old mortgage underwriter (yes, they still exist!) from Cincinnati, OH with a $408,000 Advisor Managed Account that Flunks . Is this the type of high-risk/high-fee nonsense that advisors are recommending to clients these days?

There is no way for me to politely put it: It's alarming to see so many licensed financial professionals with such an inadequate skill set when it comes to proper portfolio construction and money management.

To attack the problem, my next Portfolio Workshop teaches advisors how to correctly analyze and grade investment portfolios. If you're a licensed financial advisor with a clean disciplinary history, be sure to register and attend.

I created the Portfolio Report Card to give people an unadulterated look at how their portfolios do in key areas like risk, diversification, and performance. And my challenge stands: If you take Ron DeLegge's Portfolio Report Card challenge and get an "A" - an outstanding grade - I'll pay you $100. Go ahead, make my day.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.



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