I use the plural (portfolios) as I think most families will have multiple accounts. Even for a single individual one portfolio will be a Roth IRA while another is a taxable account. For argument sake, let’s assume a family will have at a minimum three different portfolios. How would I go about building these three accounts.
For couples, I recommend each have their own personal accounts rather than joint accounts.
Single Security Account: For a young couple, begin simply and I can think of nothing more straight forward than investing an amount each month in a mutual fund such as VTSMX or an ETF that covers the entire U.S. Equities market. VTI is such an example Exchange Traded Fund (ETF). Put a dollar amount away each month in VTI and don’t touch it. When dividends amount to enough to buy additional shares, add to the holdings. If the market declines, try to add more dollars to this basic account. This is a starting point for beginning investors.
Dual Momentum Account: The second account is one that requires a minimum of monthly attention. Feed this account monthly and on the last business day of the month, update prices using the Kipling spreadsheet and rebalance the portfolio. There are six portfolios available on this blog to serve as examples. They are: Aristotle, Euclid, Galileo, Franklin, McClintock, and Pauling.
Here is a table showing a sample portfolio and the recommendations as of 8/7/2020.
If one is using VTI in portfolio #1, be sure to use VO or VB as the U.S. Equities ETF in the Dual Momentum portfolio.
Factor-Asset Allocation Portfolio: The third portfolio is slightly more complicated, but not by much. Of course this assumes one has the Kipling running on a Windows computer. This third portfolio model is constructed around anomalies known as market factors. The principle factors are: Beta, Size, Value, Momentum, and Quality. To fill out the portfolio, missing asset classes are added. Three major asset classes not identified as a factor anomaly are: Developed International Equities, Emerging Market Equities, and Real Estate. There are others, but these are the main three that need to be added to the factor entries.
Below is such a portfolio. The ITA blog illustrates this third model. The Kepler, Einstein, Bethe, and Bohr are examples.
In this third model, there are numerous options. In this example I am using the Buy-Hold-Sell (BHS) model with the Target Filter turned on. The maximum number of assets to include in the portfolio at any one time is five (5). Different managers will use different variables to manage this Factor-Asset Allocation portfolio.
There are three example portfolio to begin your investing career. I recommend beginning in the order they are presented and stick with the first two until you gain some familiarity with the stock market.