Adjust Chris's portfolio by decreasing bond allocation to 10%, increasing stock allocation to 40%, maintaining mutual funds at 24%, and keeping savings accounts at 26% for enhanced growth potential.
To adjust Chris's investment portfolio for potential high growth, a rebalancing of the asset allocation is necessary. The original allocation includes low-risk and low-growth options such as bonds and savings accounts, which should be reconsidered for higher growth potential. Here is a suggested adjustment:
Decrease Bond Allocation:
Since bonds are typically associated with low growth, it is advisable to reduce the allocation to 10%. This reallocation frees up funds for more dynamic investment options.
Increase Stock Allocation:
To introduce higher growth potential, increase the allocation to stocks. A suggested adjustment would be to raise the stock allocation to 40%. Stocks, while carrying higher risk, historically offer greater growth opportunities over the long term.
Adjust Mutual Fund Allocation:
Maintain the mutual fund allocation at 24%, as it falls within the medium risk and growth category. Mutual funds provide diversification and moderate growth potential.
Maintain Savings Account Allocation:
Keep the savings account allocation at 26%. While it offers the lowest risk, having some funds in a savings account provides liquidity and stability.
This adjusted portfolio aims to enhance growth potential by reallocating funds from lower-growth assets to higher-growth assets. It aligns with the principle that a well-diversified portfolio should reflect the investor's risk tolerance and financial goals while seeking to optimize returns.
In summary, the adjusted portfolio includes a reduced allocation to bonds, an increased allocation to stocks, and maintained allocations for mutual funds and savings accounts to align with Chris's goal of achieving higher growth potential.