Real Life Portfolio Examples
Here are some real life portfolio examples.
Current Income Investor (current income portfolio)
John, a newly retired 59 year old IBM executive, sells his Newton, Mass home and heads west to Santa Fe. He reinvests his $1.5 million home proceeds in a high quality, laddered municipal bond portfolio. His new investment provides John and his wife $70 thousand dollars of tax-free income[a].
Funding Investor (funding portfolio)
Mr. and Mrs. Davidson decide to allocate their bonuses to funding college tuition costs for their 10 year old daughter. Using the help of a financial planner to predict future college expenses, they invest in zero coupon bonds that will completely fund their child's education.
Total Return Investor (total return portfolio)
Nancy and John are sophisticated and aggressive investors. They believe that long term municipal bonds[b] offer attractive yields and have the potential for capital appreciation. For this reason they decide to allocate 65% of their portfolio to equities and 45% to high quality municipal bonds.
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Tax sensitive investing may not provide as high a return as other investments before consideration of federal income tax consequences. [b]
Bonds contain interest rate risk (as interest rates rise bond prices usually fall); the risk of issuer default; and inflation risk. The municipal market is volatile and can be significantly affected by adverse tax, legislative, or political changes and the financial condition of the issuers of municipal securities. Interest rate increases can cause the price of a debt security to decrease. A portion of the dividends you receive may be subject to federal, state, or local income tax or may be subject to the federal alternative minimum tax. A portion of the funds income may be subject to state taxes, local taxes and the federal alternative minimum tax. Type of Portfolios We Create | Portfolio Real Life Examples | Municipal Bonds FAQ | Tax-Table / Credit Ratings Table