Making Your Own Mutual Fund

Hello readers.  Yes I tend to talk a lot about individual stocks.  Why?  Because most Financial Advisors won't.  They are forced by the companies they represent to not advise about individual stocks, advise on a limited few individual stocks, and they give you almost no information or assistance in how to invest in individual stocks.  Yet, they should be in your portfolio!

I advise that 40% of your holdings in your portfolio be in long term invested individual stocks if you have over $200,000.00 in assets in your portfolio and you are in the age bracket of still needing growth in your portfolio.  Even if retired, if you have enough in income funds to meet your needs I suggest the same for you.  This is the category of which I currently fall into.  You should keep 60% in Mutual Funds and Bond Funds which are a lesser risk and should all be 4 or 5 Star funds.  An example is PEMGX which is a fund I hold that is a 5 star fund.

It is also important that you weight your investments by sector.  Here is the weighted amounts I was given that seem to be working for me so I will share them with you.  I really appreciate my friend who is a financial advisor suggesting and giving this information to me.  Take 40% of your portfolio and make your own mutual fund using the weights of these sectors.  Consumer Discretionary 13%, Consumer Staples 9.40%, Energy 10.40%, Financials 16.10%, Healthcare 11.50%, Industrial 11.40%, Information Tech. 20.30%, Materials 3.50%, Telecommunications 2.40%, Utilities 2%

Can you tweak those percentages.  I don't know what my friend that gave me these numbers would say, but I say yes.  Why?  First I think Healthcare is weighted too low.  With good healthcare companies in your portfolio they are not going to let you down.  Healthcare is hear to stay forever and people will always be sick.  Some of my suggestions in Healthcare would be NVS, RAD, WAG, CVS, RDY and ABT.  These are all good quality individual stocks in the sector.  I feel there is also room for services such as EBAY and BABA.  Personally I am staying away from EBAY for the time being but I rate BABA as a Buy.  Personally I was not very impressed by the choices given in the Financial sector that were suggested.  I did like EV that was suggested and then I went with my gut and took WFC.

The key to making your own portfolio is being ready to keep these individual stocks for the long term to see and collect the rewards.  Most are blue chip and large cap stocks.  Not new IPO's and stocks with a short or poor history.  You want to find stocks that also have a history of increasing dividends.  So you do want the stocks you pick to pay dividends (I balk at that on rare occasion).  Maybe they don't pay the best dividends, but they have a good track record of growth and increasing dividends over time.  Building your own portfolio can be difficult to understand.  For those that do not understand you should consult someone that has done this before or a financial advisor that is willing to assist which are few and far between.  But good choices can yield good returns in the long run, but don't think it will make you rich overnight.  It does not work that way.

Gus S.

Disclaimer: Make sure to review any information found on this blog site with your personal financial advisor before making any decisions. I am providing general information and not financial advise. I am not a licensed stockbroker or financial advisor.