The 100-Year Portfolio

The 100-Year Portfolio is a unique group of index funds, exchange traded funds and dividend-paying stocks. The portfolio is designed for long-term investors who want their investments to increase steadily in value for many years. The objective of the portfolio is growth and not income. The broad architecture of the portfolio was designed by Richard Howard using investment principles espoused on buyupside.com.

The value of the portfolio will grow as a consequence of the combination of passive buy-and-hold investing techniques.

The portfolio includes five major components:

Exchange traded funds that track major domestic and foreign stock markets account for fifty percent of the dollars invested. These low-cost funds are held for years and years. This investing style ensures the continuity of holdings from year to year. One or more of the funds would be sold only if a complete market collapse were imminent.
Dividend-paying growth stocks account for thirty percent of the dollars invested. These stocks are held for years and years. Companies are selected that have experienced and are expected to experience long-term price appreciation and increasing dividends. A stock is sold only if it experiences business difficulties that mean dividends will be reduced or eliminated for a long period.

All dividends are reinvested to accumulate additional shares. Dividend reinvestment ensures the accumulation of additional shares without adding any new money to the portfolio. After years of reinvesting dividends all of the original investment dollars will be reflected in additional shares. And as price appreciates, the value of the portfolio will grow due to owning more shares at higher prices.
High dividend-paying stocks make up ten percent of the fund's dollar investments. These stocks are held for years and years and represent a somewhat more aggressive investing style since more risk often comes with higher dividend yields. This group of stocks includes established electric and gas utilities that have high yields because of high payout ratios or low stock prices. Most electric utilities are relative safe stocks to own because they usually have lots of free cash to distribute to shareholders.

Holdings of the 100-Year Portfolio

The portfolio includes four passively managed index and exchange traded funds, four dividend-paying growth stocks, four high dividend-paying stocks and cash. Four cyclical semiconductor stocks, which are on the downside, will be included when they turn to the upside.

100 Year Portfolio
Component	Investment	Symbol	Description	Dividend	Percent of Total Invested
Index Fund	Vanguard 500 Index	VFINX	Tracks S&P 500 - Large U.S. stocks.	Yes	20%
ETF	iShares Russell 2000 Index	IWM	Tracks Russell 20000 - Small U.S. stocks	Negligible	20%
ETF	iShares MSCI Pacific ex-Japan	EPP	Tracks MSCI Pacific Free ex-Japan Index - Includes Australia, Hong Kong, New Zealand, and Singapore stocks.	Yes	5%
ETF	FTSE/Xinhua China 25 Index Fund	FXI	Tracks FTSE/Xinhua China 25 Index - 25 largest Chinese stocks.	Negligible	5%
Dividend & Growth Stock	PepsiCo	PEP	Food Processing	Yes	7.5%
Dividend & Growth Stock	Emerson	EMR	Conglomerate	Yes	7.5%
Dividend & Growth Stock	3M	MMM	Conglomerate	Yes	7.5%
Dividend & Growth Stock	Illinois Toolworks	ITW	Capital Goods	Yes	7.5%
High Dividend Stock	Ameren	AEE	Electric & Natural Gas Utility	Yes	2.5%
High Dividend Stock	Duke Energy	DUK	Electric & Natural Gas Utility	Yes	2.5%
High Dividend Stock	Hawaii Electric	HE	Electric Utility	Yes	2.5%
High Dividend Stock	Southern Company	SO	Electric Utility	Yes	2.5%

Updated November 7, 2009.