Diversify with Individual Stocks

Diversify with individual stocks

Individual stocks carry the potential for growth to dizzying heights—with the risk of losing all your investment. This portfolio keeps the insanity to a minimum by allowing individual stocks no more than a 10% total share of the portfolio.

For individual stocks, the experts suggest choosing a company you know well, especially if you think you know something that the market as whole does not (which is unlikely)

To minimize trading costs, buy stocks in 100-share lots and hold them for a long time

To minimize tax consequences, keep stocks in tax-deferred accounts like your IRAs

fund type	fund name, ticker symbol and why I like it	target amount	expense ratio
large index	Schwab 1000 Index Fund SNXFX Tracks the Schwab 1000 Index, representing the largest 1000 publicly traded U.S. companies, enlivening the solid performance of the S&P 500 with the diversity of the 500 next-largest companies: over the last five years, has returned three times as much as the S&P 500, suggesting this fund is a robust vehicle for bear as well as bull markets	30%	0.29%
small index	Schwab Small-Cap Index Fund SWSSX Tracks the next-largest 2000 publicly traded U.S. companies, for a broadly diversified sampling of smaller stocks	15%	0.19%
small actively managed	Northern Small-Cap Value NOSGX A value fund that seeks to identify and buy stock in small U.S. companies trading below their true worth in hope their prices will rise faster than the overall market	8%	1.36%
small actively managed	Janus Triton Fund JATTX According to Morningstar, this small-cap growth fund "delivers the goods"—Triton is also the largest moon of Neptune, so that probably helps, too	7%	0.96%
international index	Schwab International Index Fund SWISX Tracks the Morgan Stanley Capital International Europe, Australasia Far East (MSCI-EAFE) Index, a benchmark index for 22 developed markets outside the United States and Canada, the largest components being Japan and the United Kingdom: since its inception in 1969, this index has returned on average 9.45% a year	15%	0.19%
international actively managed	Oakmark International Small Cap I OAKEX Despite occasional rough times, this compact portfolio run by 2006 Morningstar International Stock Manager of the Year David Herro has had good long-term results: a 17% annualized return over the past decade, bettering all but one of its category rivals	8%	1.67%
international actively managed	Harding Loevner Emerging Markets Portfolio HLEMX Many believe the greatest growth over the coming decades will come from emerging markets like India, China, and Brazil: the renowned Harding Loevner investment team examines selects from among over 20 developing countries 35-75 companies having sound management, financial strength, fast growth, and an undervalued price	7%	1.63%
I believe that each of these three stocks make good long-term investments, but individual stock prices, much more than mutual funds, can change drastically and quickly, so do your research before buying.
individual stock	Verizon VZ Making waves with its DSL and wireless offerings, this telecom giant and Dow leader has itself invested wisely for a bright future	4%
individual stock	Charles Schwab Corporation SCHW A brokerage service growing in popularity in America (and Asia), its superb website, reasonable fees, and excellent customer service set it ahead of its competitors	3%
individual stock	Netflix NFLX It should come as no surprise that I would invest in this soundly managed rule-breaker that has overturned the DVD by mail market, and continues to innovate ahead of its competition	3%