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The Essence of Wealth Building Pyramid Portfolios

Investors Prosper With Wealth Building Pyramid Portfolios

Wealth building pyramid portfolios can help you build financial security and retirement independence. But like anything else, results show both the time and effort you put into it. You can learn how to become a superior investor by spending the time and making the effort. Investing is simple, but it is not easy to consistently do well.

The White Top View bite-sized lessons and discussions will continue and cover the many aspects of investing and growing your portfolio. By taking the time and making the effort we can help you reach your financial security goals.

The Essence of Wealth Building Pyramid Portfolios

Income Portfolio Essence

Build pyramids retirement wealth

Investors can build financial security and retirement independence with pyramid portfolios.

  • solid investments in large established profitable companies
  • conservative economic risk
  • some growth
  • dividend income
  • least attention needed
  • few decisions
  • few trades
  • long (3+ years) holding periods
  • least knowledge
  • modest returns
  • 50% to 100% of total portfolio 

The income investment portfolio forms the large broad base of all pyramid portfolios. It is the solid conservative foundation that can be used in all markets. Income portfolios take the least time, knowledge and attention to build and manage. All portfolio builds should begin with a solid income investment foundation.

Many investors are content to have their entire investment holdings in equities that qualify as income portfolio investments. That 100% invested, solid conservative approach has successfully performed very well for generations of investors. If you want to build only one type of portfolio and learn one aspect of investing, this is the one to learn and build.

Investors seeking more or faster portfolio growth have to move beyond the income layer. Using the Pyramid Portfolio approach, a minimum of 50% of a total portfolio remains in the solid income base layer.

Successful investors willing to learn and use an hour a week can build wealth by overseeing an income portfolio. No further action required.

For investors looking for more growth, higher returns or more involvement in managing their wealth building, there are many choices. Two key ones follow.

Growth Portfolio Essence

  • medium-sized growth or larger turn around companies
  • low to medium risk
  • strong growth
  • low or no dividend income
  • moderate attention needed
  • more decisions
  • more trades
  • short to medium holding periods, weeks to a year
  • moderate knowledge
  • higher solid but more volatile returns
  • 0% to 50% of total portfolio

Growth portfolio investing differs significantly from income investing. Growth portfolios offer greater total returns at higher risk and do need significantly greater knowledge and time to manage well. Anyone willing to learn and dedicate an hour a day can build and manage a good solid growth portfolio.

Growth portfolios can be built after the income portfolio base reaches critical mass. Critical mass calculation and explanation will be in a following blog post. The growth portfolio will always be smaller than the income portfolio. It can grow to become between half to two-thirds the size of the income portfolio.

The growth portfolio is a fair weather investing vehicle. When conditions and opportunity are favorable, growth portfolios can dramatically accelerate your overall investment performance. However when circumstances change or are unfavorable, the growth portfolio investments get sold. Growth portfolios go to cash in unfavorable conditions.

Speculative Portfolio Essence

  • small to medium-sized rapid growers or speculations
  • high to extreme risk
  • spectacular growth or price changes
  • no dividend income
  • close attention required
  • many decisions
  • many trades
  • short holding periods, days to months
  • high knowledge
  • stunning winners, crushing losers
  • 0% to 30% of total portfolio

There is no such thing as a solid speculative portfolio. Speculation is for the courageous investor and only when conditions are fantastic. All the stars, circumstances and ducks must line up before building a consistently performing speculative portfolio. That means most of the time, in most markets, the speculative portfolio has few or no holdings.

If growth portfolios are fair weather investing, speculative portfolios are strictly perfect weather investing. However, there is gold in them there hills! For those willing to learn, speculation can produce outstanding results.

Successful speculating skill can be learned. Done well, it is not gambling or buying a lottery ticket. However, if you don’t know what you are doing, stick to buying lottery tickets. You will lose your money but at least you know the incredibly long odds are insanely unfavorable.

With speculating, when circumstances are excellent, the returns are exceptional and the risks manageable. But the knowledge, time and effort required to do it well is also substantial. The best speculators only play when the odds are favorable. That means most of the time, in most markets, the speculative portfolio has no positions.

When conditions are favorable, speculators pounce to make hay while the sun shines but quickly withdraw when the sunsets.

Each of these portfolios will be further discussed in following posts.

Investors Prosper With Wealth Building Pyramid Portfolios

Wealth building pyramid portfolios can help you build financial security and retirement independence. But like anything else, results show both the time and effort you put into it. You can learn how to become a superior investor by spending the time and making the effort. Investing is simple, but it is not easy to consistently do well.

Our bite-sized lessons and discussions will continue and cover the many aspects of investing and growing your portfolio. By making the effort we can help you reach your goals.

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Your comments and questions are welcome here. Or email me at WhiteTop@WhiteTopInvestor.com. Bite-sized White Top View posts are lessons to help non-investors on the way to becoming knowledgeable, comfortable, confident investors. By demystifying investing and giving you a better understanding of markets, one small step at a time, you can become the master of your financial security and independence. The White Top Views email list will never be shared or sold.

Have a prosperous day!

Bryan

White Top Investor
whitetop@WhiteTopInvestor.com
www.WhiteTopInvestor.com
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These discussions and information intend to help you better understand markets and investing. I am not a financial or investment advisor; opinions are for informational and educational purposes only and are not intended as investment advice. For syndication of the site or blog, please contact info@WhiteTopInvestor.com. © 2014 Bryan Kelly

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