Building That First Portfolio

Aug. 22, 2016 2:31 PM ETVTI, VEA, VNQ, VWO, RWX, TLT, BIV, TIP5 Comments
Lowell Herr profile picture
Lowell Herr


  • Thinking through a portfolio business plan.
  • Finding a tool to measure portfolio performance.
  • Link to portfolio tracking spreadsheet provided in article.

Whether one is launching their very first portfolio or considering revising an existing one, the thought process is similar. Consider the following questions.

  • What goes into a portfolio business plan?
  • What asset allocation is appropriate?
  • Will stocks or index funds be used to populate the portfolio?
  • Will a particular investing model be followed?
  • What tools are available to track portfolio performance?
  • How does one benchmark the portfolio?
  • What broker will best serve my needs?

Answers and actions to these questions will vary widely from investor to investor. Below is an approach one might use to build that first portfolio or revise an old one. To get started, I am using the asset allocation plan recommended by David Swensen in what I call the "Swensen Six." This is a good place to start as the six ETFs provide for global diversification, equity orientation, and inflation protection. The percentage allocations are sufficiently large so they have an impact on the portfolio while small enough not to adversely influence the portfolio in case of a major bear market. More on portfolio protection will show up later in this article.

The following portfolio dashboard provides a visual business plan for a portfolio in that it specifics an asset allocation model and the percentages to allocate to each asset class. If we follow the "Swensen Six" as our starter plan we allocate it as follows using non-managed index ETFs.

  • U.S. Equities - VTI (30%)
  • Developed International Equities - VEA (10%) Originally, Swensen recommended 15% for this asset class.
  • Emerging Market Equities - VWO (10%) Originally, Swensen recommended 5%.
  • REITs - VNQ (20%) Another option is to allocate 15% to VNQ and the remaining 5% to International REITs RWX.
  • U.S. Treasury bonds, bonds, and inflation-protected securities - A combination of TLT, BIV, and

This article was written by

Lowell Herr profile picture
Retired physics instructor and now editor of the ITA Wealth Management investment blog.

Disclosure: I am/we are long VTI, VWO, VNQ, TLT. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

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