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Green Investing on a Budget: $10K Portfolio

So you have $10,000, you've read yesterday's post, you're all set up and ready to invest responsibly, and you have no idea where to start. First, you can start with our earlier posts: here, here, and here. It lays the baseline for what I'll talk about in terms of asset allocation.

Here are some good suggested portfolios for the $10K investor at varying risk tolerance / time horizon levels:

Concept: Complete Portfolio
Risk Level: High Risk
Timing: Long Horizon (5+ years)
Suggested Allocations:

PAXHX 14.50% $1,450 Bond
DBA 17.50% $1,750 Agriculture
EVX 15.00% $1,500 Recycle
GRN 16.50% $1,650 Low Carbon
PBD 18.50% $1,850 Energy
DSI 15.00% $1,500 Social
Cash 3.00% $300

In this scenario, the one mutual fund, Pax World High Yield, adds bond exposure to round out the overall holdings. It has an average expense ratio (roughly 1%) and a very low minimum at $250 for non IRA accounts (IRAs have no minimum), so it fits well amongst the ETFs. DBA makes an excellent hedge in agriculture, as well. I couch this allocation with the disclaimer that many of the other pieces are correlated, since achieving maximum diversity with $10,000 is difficult to do. You should see some nice diversification with the agriculture play (typically, agriculture is zero to negatively correlated to the S&P) and the bond play making over 30% of the portfolio non correlated. In the future, it may make sense to add TAN, FAN, or FUE, the solar, wind, and biofuel ETFs, but for now, PBD covers all those bases. The second portfolio is for more green specific biased investors who only want $10,000 of coverage in their total portfolio, in which case more risk is warranted (and unavoidable).

Concept: Total Green
Risk Level: High Risk
Timing: Long Horizon (5+ years)
Suggested Allocations:

EVX 15.00% $1,500 Recycle
FAN 10.00% $1,000 Energy
FUE 10.00% $1,000 Energy
GRN 15.00% $1,500 Low Carbon
PBD 10.00% $1,000 Energy
PHO 15.00% $1,500 Water
PZD 12.00% $1,200 Technology
TAN 10.00% $1,000 Energy
Cash 3.00% $300

Overall, this is 40% in green energies - biofuel, solar, wind, and a combination of all forms in PBD. Because it's technology intensive, it will have some pretty high beta and some pretty volatile motion. Ultimately, it's a position play in a larger portfolio, and not well suited to a $10K only investor. The water and recycling components (PHO and EVX respectively) round out the total green theme, with some carbon (GRN) thrown in as well. This portfolio is not for the faint of heart, and I certainly wouldn't recommend it to anyone as their total portfolio. But as a green piece that you can leave alone for a good long while, it's worth considering.

In the next few posts, I'll detail some low(er) risk $10K portfolios, and I'm going to start focusing on some day trading as well. Look out for more!


This post first appeared on Smugly Green, please read the originial post: here

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Green Investing on a Budget: $10K Portfolio

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