Virtual Portfolio Objectives
Investment Goal
Return: 6%
Virtual investment: $100,000
Monitoring : once a month for two hours (recording return of the month etc.)
Project duration: a year
*Virtual investment account via Investopedia (may make real investment in the near future)
* Portfolio period should be holding “forever” as Warren Buffet suggested.
Adjustments are made due to market situation.
Why did I pick my own investment portfolio instead of buying Index fund？
Highly liquid
Have the shareholder ownership = Take control of your voting right !
The customized benefit
=> Complete control over the companies I choose to invest in.
=> Stocks/sectors with higher risk would have lower weight in the portfolio
=> Avoid over value stocks as a group in index fund ​
May carry more risk than index fund?
Maybe not!
Research shows that index fund cannot prevent people from the loss due to economic downturn. With my own portfolio, I can make adjustment to prevent future loss instead of selling the whole index.
Meanwhile, as long as the personal portfolio is diversified, the risk level can be even lower than index fund! You can achieve diversification by buying over 20 stocks, and that can reduce almost all the unsystematic risk. (Be careful, don’t over diversify!)
Although this is time-intensive, as investors must research and follow each individual stock in their portfolio, I enjoy doing valuation, and I believe it would take me less and less time as I practice more!