Calculating the Total Value of the Portfolio

Oct 13, 2025 by wbrum.org 108 views

Introduction

Creating an investment portfolio is a crucial step in securing your financial future. It involves allocating your funds into various assets to generate returns while minimizing risk. In this article, we will analyze an investment portfolio consisting of a savings account, municipal bond, and preferred stock. We will examine the amount invested, rate of return (ROR), and provide a comprehensive analysis of the portfolio's performance.

The Investment Portfolio

The investment portfolio consists of three assets:

Savings Account: $3,200 invested at a rate of return (ROR) of 2.1%
Municipal Bond: $4,900 invested at a ROR of 4.5%
Preferred Stock: $940 invested at a ROR of 10.5%

Calculating the Total Value of the Portfolio

To calculate the total value of the portfolio, we need to add the amount invested in each asset.

Savings Account: $3,200
Municipal Bond: $4,900
Preferred Stock: $940

Total Amount Invested = $3,200 + $4,900 + $940 = $8,040

Calculating the Total Rate of Return (ROR)

To calculate the total ROR, we need to calculate the interest earned on each asset and add it to the principal amount.

Savings Account: $3,200 * 2.1% = $67.20
Municipal Bond: $4,900 * 4.5% = $220.50
Preferred Stock: $940 * 10.5% = $98.70

Total Interest Earned = $67.20 + $220.50 + $98.70 = $386.40

Total Value of the Portfolio = Total Amount Invested + Total Interest Earned = $8,040 + $386.40 = $8,426.40

Calculating the Total Rate of Return (ROR)

To calculate the total ROR, we need to divide the total interest earned by the total amount invested and multiply by 100.

Total ROR = (Total Interest Earned / Total Amount Invested) * 100 = ($386.40 / $8,040) * 100 = 4.81%

Portfolio Analysis

Based on the analysis, we can conclude that the investment portfolio has a total value of $8,426.40 and a total ROR of 4.81%. The portfolio is diversified across three assets, which reduces the risk of investing in a single asset.

Benefits of Diversification

Diversification is a key strategy in investing. By allocating funds across different assets, you can reduce the risk of investing in a single asset. In this portfolio, the municipal bond and preferred stock have a higher ROR compared to the savings account. This diversification helps to reduce the risk of the portfolio and increases the potential returns.

Risks Associated with the Portfolio

While the portfolio has a diversified asset allocation, there are still risks associated with each asset. The municipal bond and preferred stock have a higher ROR, but they also come with a higher risk. The savings account has a lower ROR, but it is a low-risk investment.

Conclusion

In conclusion, the investment portfolio has a total value of $8,426.40 and a total ROR of 4.81%. The portfolio is diversified across three assets, which reduces the risk of investing in a single asset. While there are risks associated with each asset, the portfolio provides a good balance of risk and return.

Recommendations

Based on the analysis, we recommend the following:

Continue to invest in the municipal bond and preferred stock to take advantage of their higher ROR.
Consider investing in other low-risk assets, such as a money market fund or a short-term bond fund, to further diversify the portfolio.
Regularly review and rebalance the portfolio to ensure that it remains aligned with your investment goals and risk tolerance.

Appendix

The following table summarizes the investment portfolio:

Investment	Amount Invested	ROR	Interest Earned
Savings Account	$3,200	2.1%	$67.20
Municipal Bond	$4,900	4.5%	$220.50
Preferred Stock	$940	10.5%	$98.70
Total	$8,040	4.81%	$386.40

Introduction

In our previous article, we analyzed an investment portfolio consisting of a savings account, municipal bond, and preferred stock. We calculated the total value of the portfolio, total rate of return (ROR), and provided a comprehensive analysis of the portfolio's performance. In this article, we will answer frequently asked questions (FAQs) related to the investment portfolio.

Q: What is the total value of the investment portfolio?

A: The total value of the investment portfolio is $8,426.40.

Q: What is the total rate of return (ROR) of the investment portfolio?

A: The total ROR of the investment portfolio is 4.81%.

Q: How can I calculate the total value of the investment portfolio?

A: To calculate the total value of the investment portfolio, you need to add the amount invested in each asset and add the interest earned on each asset.

Q: How can I calculate the total rate of return (ROR) of the investment portfolio?

A: To calculate the total ROR, you need to divide the total interest earned by the total amount invested and multiply by 100.

Q: What are the benefits of diversification in an investment portfolio?

A: Diversification is a key strategy in investing. By allocating funds across different assets, you can reduce the risk of investing in a single asset. In this portfolio, the municipal bond and preferred stock have a higher ROR compared to the savings account. This diversification helps to reduce the risk of the portfolio and increases the potential returns.

Q: What are the risks associated with the investment portfolio?

A: While the portfolio has a diversified asset allocation, there are still risks associated with each asset. The municipal bond and preferred stock have a higher ROR, but they also come with a higher risk. The savings account has a lower ROR, but it is a low-risk investment.

Q: How can I rebalance my investment portfolio?

A: To rebalance your investment portfolio, you need to regularly review and adjust the asset allocation to ensure that it remains aligned with your investment goals and risk tolerance. You can do this by selling or buying assets to adjust the portfolio's asset allocation.

Q: What are some other low-risk investment options?

A: Some other low-risk investment options include:

Money market funds
Short-term bond funds
Commercial paper
Treasury bills

Q: How can I minimize risk in my investment portfolio?

A: To minimize risk in your investment portfolio, you can:

Diversify your assets to reduce the risk of investing in a single asset
Invest in low-risk assets, such as money market funds or short-term bond funds
Regularly review and rebalance your portfolio to ensure that it remains aligned with your investment goals and risk tolerance

Q: What is the importance of regular portfolio reviews?

A: Regular portfolio reviews are essential to ensure that your investment portfolio remains aligned with your investment goals and risk tolerance. By regularly reviewing your portfolio, you can:

Identify areas for improvement
Adjust the asset allocation to minimize risk
Take advantage of new investment opportunities

Conclusion

Appendix

The following table summarizes the investment portfolio:

Investment	Amount Invested	ROR	Interest Earned
Savings Account	$3,200	2.1%	$67.20
Municipal Bond	$4,900	4.5%	$220.50
Preferred Stock	$940	10.5%	$98.70
Total	$8,040	4.81%	$386.40

Note: The interest earned is calculated based on the ROR and the amount invested in each asset.