7 Types of Popular Investment Portfolios

Different paths to take while investing in the stock market.

In a perfect world, investors could choose the best investment portfolio that would offer a high risk-adjusted return during all market conditions. Unfortunately, the perfect investment portfolio doesn't exist. Certain markets are better for various sectors, asset types and geographical locations. But don't despair, there's an investment portfolio for all investors. Investors vary in their level of experience and interest in investing. Some prefer a DIY investment approach, while others relegate investing to a professional. Robo advisors abound to serve those in between the DIY approach and those seeking professional management. Here are seven diversified portfolios to coincide with your style, goals, timeline, risk tolerance and investing preference.

Hands-off aggressive investing.

Many investors prefer "one-and-done investing." For aggressive leaning or younger investors, the Fidelity Four-in-One Index Fund (FFNOX) provides an easy, inexpensive and tax-efficient diversification, says Kristi Sullivan, owner and certified financial planner at Sullivan Financial Planning in Denver. Unlike a target-date fund, FFNOX maintains a static asset allocation. The fund allocates between 70% and 85% to stocks with the remainder invested in bond investments, holding U.S. and international stocks along with investment-grade bonds. This Fidelity fund provides a sensibly diversified portfolio. The low 0.11% net expense ratio adds to this portfolio's allure. "You can spice it up by adding a real estate or other alternative asset class and have a well-rounded portfolio without fuss," Sullivan says.

Retirement-blended portfolio.

With retirees living well into their 80s and the recent interest rate declines, the typical bond-heavy retirement portfolio is becoming obsolete. Today, retirement spans decades and growth investing is crucial. "An investor approaching retirement needs a blend of investments, some income-oriented and some growth-oriented. In other words, both stocks and bonds," says Cory Bittner, chief operating officer at Falcon Wealth Advisors in Kansas City, Missouri. Retirees need to steer clear of speculative or alternative investments, Bittner says. Bonds are needed to soften the blow from equity declines and to generate income for living expenses. "However, too many bonds won't generate enough long-term growth and run the risk of not keeping pace with inflation. For that reason, a blended portfolio must also contain growth-oriented investments like stocks, to provide long-term growth," Bittner adds.

Invest with your heart.

Once considered a fringe investment approach, socially responsible investing is accessible to all. The socially responsible investing umbrella includes eschewing sin stocks that sell alcohol, tobacco or support gambling. Firms with environmentally sound practices and a commitment to social justice also fall into the SRI camp. Investors who want to pick and choose firms that adhere to their values can invest in funds or individual stocks. These financial services companies offer socially responsible portfolios: Betterment, Wealthsimple and OpenInvest, to name a few. For investors seeking a socially responsible fund, there are scores from which to choose, from niche offerings to broadly diversified impact investments. iShares offers three MSCI funds: KLD 400 Social ETF (DSI), USA ESG Select ETF (SUSA), and ACWI Low Carbon Target ETF (CRBN).

All-season classic investment portfolio.

Investors with a taxable brokerage account seeking long-term growth, reasonable stability and tax minimization are ideal for a classic portfolio of 60% stocks and 40% bonds, says David Dietze, president and chief investment strategist at Point View Wealth Management in New York. The 60% stock portfolio is divided among high-quality dividend-paying equities across diverse economic sectors. Seek out dividend growers in mature and stable businesses, Dietz recommends. Since qualified dividends enjoy lower tax treatment, they're ideal for taxable accounts. The 40% fixed portion is invested in a basket of high-grade diversified municipal bonds. "Keep maturities to 10 years or less, with a laddering strategy," he says. This limits interest rate volatility. This classic portfolio can be implemented, with individual stocks and bonds or funds.

Enhanced value investing portfolio.

Changing asset allocation is appropriate for more active investors. Steven Jon Kaplan, CEO at True Contrarian Investments in New York, screens for traditional value methods like price-earnings and price-book ratios first, a method introduced by legendary value investor Benjamin Graham. From the value-priced list of assets, Kaplan adds screens that indicate upcoming price increases. He looks for insider buying by corporate executives. He also examines other quantitative measures like fund flows. "Sectors with unusually heavy net inflows tend to subsequently underperform," Kaplan says. This enhanced value investing also recommends selling when the contrasting conditions occur. Keep in mind, it's difficult to implement any investment strategy with perfect timing.

Diversified asset classes portfolio.

Traditional stock and bond portfolios stand the test of time. But adding less correlated asset classes to a typical stock/bond portfolio can cushion stock market declines and boost long-term returns. Alan Lewis, the co-founder of DiversyFund in San Diego, suggests investors consider alternative assets such as real estate funds, private equity funds, hedge funds, venture capital funds and commodity funds. Many new alternative investing platforms are available for investors to tap these asset classes. Previously available only to high-net-worth investors, new opportunities with lower investment minimums are available for real estate crowdfunding platforms like DiversyFund and Fundrise. Even blue-chip art investing is now available for low minimums at Masterworks. While Titan Invest's robo advisor makes hedge fund investing available to the masses.

Conservative income portfolio.

Retirees or those who prefer capital preservation instead of growth will appreciate a conservative income portfolio. Conservative model portfolio examples heavily weight bonds and high-yield blue-chip stocks. The goal for a conservative income portfolio is to maintain the portfolio value and provide an income stream. Betterment's Black Rock Income Portfolio includes various bond funds including a US High-Quality Bond ETF, a U.S. floating-rate corporate bond ETF, a U.S. mortgage-backed bond ETF, short- and intermediate-term corporate bond ETFs and a high-yield corporate bond fund. Vanguard's LifeStrategy Income Fund (VASIX) offers a one fund conservative income portfolio with a low 0.11% expense ratio. The fund allocates 56% to the U.S. bond market, 24% to international bonds, 12% to the U.S. stock market and 8% to international stocks.

Consider these different investing approaches:

-- A hands-off aggressive style.

-- Retirement-blended portfolio.

-- Socially responsible investing.

-- All-season classic investment portfolio.

-- Enhanced value investing portfolio.

-- Diversified asset classes portfolio.

-- Conservative income portfolio.