Asset Allocation question

Dec 22, 2006 2 Replies
M

I've been using asset allocation for a long time with a variety of standard investment accounts (401k, IRA, brokerage, etc.) but a few things have changed in 2006. I've got three new accounts and I can't figure out whether I should consider them part of my investments and, therefore, part of my asset allocation plan:


  1. My company folded its pension plan and I now have an account that will pay me a lump sum when I leave the company. I consider this to be a cash account and its current value is about 10% of my total portfolio.


  1. I opened a 529 College Savings plan, for my newborn, that's in an age-based account. I know the current allocation (87% equities and 13% fixed income) but no other details. Its current value is about 10% of my total portfolio.

  2. I have some non-qualified stock options that have, finally, gone into the black and their current value is about 10% of my total portfolio.

Any feedback would be appreciated. Thanks in advance,



Mike Shapp snipped-for-privacy@yahoo.com



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P

Overall I think, except for the 529, all others should be considered as part of your overall holdings.

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J

I agree with Peter, but would add a question - usually when a pension goes to a fixed, lump sum, there is a chance to take the present value and roll it over to an IRA. Is that an option for you? If not, then you are right to treat as cash and continue to track its present value.

The NQOs should be treated as company stock with strike price as cost. But their value will be treated as earned income when you sell/exercise them, purchase date (for long term gain treatment) will only clock as of the day you exercise if you choose to keep the stock and not do a cashless sell. JOE

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