Investment

Portfolio
A paper submitted to Prof. Arthur Barrido
Department of Accounting, College of Management
University of the Philippines Visayas, Iloilo City
In Partial Fulfillment of the Requirements for the course in
BA 145 Investments

Submitted by:
Ann Julienne A. Aristoza
May 16, 2017

2
Investor Profile
Name: Ann Julienne A. Aristoza
Age: 21 years old
Occupation: Fresh Graduate
Risk Tolerance: risk adverse
Personality: impatient, not comfortable with gambling/putting money in something that
cannot be controlled
Financial Details: no substantial savings, no debts
Future needs for capital:

Horizon Amount Needed Date Reason

8 months worth of rent
10,000/month for 8
near (short-term) November 2017 (working in
months
Makati/Cebu)
near (long-term) 200,000-400,000 July 2018 expenses for law school
far (long-term) 500,000 2023 car
far (long-term) 5 million 2025 house & lot
establishment of a
charity (womens
far (long-term) 3 million 2035
aid)/non-profit
organization

The most immediate need for capital is to finance/pay the rent and other living expenses
Id be incurring while working. In addition to my salary, an investment earning on a
short-term basis can help with these expenses. The first major need for funds would be to
help finance my expenses for law school next year until 2022-2023. Subsequently, things
like cars and a house are next on my financial goals, with the establishment of my non-
profit charity once I am financially stable. A majority of my financial needs are not
pressing, with time being on my side.
Financial Goals (5-year horizon)
Salary

Year 1 Year 2 Year 3 Year 4 Year 5

Monthly Salary 15,000-18,000 18,000-21,000 21,000-25,000 25,000-30,000 30,000-35,000

As seen above, I have specified my salary. Realistically, I can expect to earn around the
area of 15,000 on the first year of my job as an accountant. Until year 5, I expect
increments with my monthly salary reaching 30,000-35,000 by the 5th year.

Savings
As specified in my future needs for capital, I need a lot of savings to finance my future
expenses for law school. I have a monthly savings goal of around 5%-10% of my
monthly salary. Since I dont plan on working while studying law school, my projected
savings would only total 6,000 (15,000 monthly salary x 8 months x 5%) to 12,000
(15,000 monthly salary x 8 months x 10%) for the 8 months I plan on working. Such
savings are barely enough in covering my law school expenses. I need to take this into
account as I build my portfolio and fix my finances.
Portfolio Construction
Taking into consideration both my risk aversion and my urgent financial goals, I am
willing to construct a moderately aggressive portfolio; my asset allocation to be divided
almost equally between fixed-income securities and equities in order to provide a balance
of growth and income. My asset allocation will be itemized as follows: (1) 20%
allocation to Cash, (2) 50% allocation to Short-term bond funds, and (3) 30% allocation
to Equities, as illustrated below:

20%
30%
Cash
Short-term Bond
Funds
Equity

50%

Half of my portfolio is invested in short-term bond funds as I aim short-term earnings in

order to finance my immediate plans and expenses. I only have a time horizon of 8
months before I start shelling out money for my education and thus, short-term
investments with relatively high rewards are needed. As I become more financially stable
and graduate law school, I will readjust my portfolio to lean towards long-term
investments seeing as I no longer have urgent need for capital.

Investments
Bonds. Bonds are commonly referred to as fixed-income securities. For my short-term
bond funds, I plan on a bond investment with BDO Unibank, Inc.

Equities. Equities are shares or stocks or any other security representing an ownership
interest. My target investment regarding shares are to be diversified further into different
companies, a portfolio of blue chips companies like PLDT and Jollibee, as well as
companies which have potential like 2Go.

Diversification
Diversification is defined as the spreading of risk and reward within an asset class.
Diversifying your investments would ensure that all of the risk and all of the chances for
rewards are not placed in one asset/investment, alone; because it is difficult to know
which particular subset of an asset class or sector is likely to outperform another.
Diversifying my portfolio would allow me to get a slice from different pies instead of just
banking on one kind of pie that may turn out bad/rotten.

Rebalancing
Rebalancing is a method used to return a portfolio to its original target allocation at
intervals. This is needed in order to prevent my portfolio from being exposed to greater
risk or lower returns just because I am ignorant of market movement. Rebalancing my
portfolio would allow it to constantly adjust not only to the changing market but to my
changing needs as well.