Portfolio Allocation

Hi there,

What is an optimal portfolio allocation strategy for a 21 year old? Different websites have markedly different strategies, but I'm looking for something that is mostly value oriented and makes sense. Also does anyone know of some great funds that meet each sort of allocation sector? I'm interested mostly in mutual funds and ETFs.

Here's what I have so far:

DODFX - 1/7 of portfolio (Dodge and Cox International) FAIRX - 1/7 of portfolio (Fairholme Fund) MFOCX - 1/7 of portfolio (Marsico Focus Fund) MGRIX - 1/7 (Marsico Growth Fund) MIOFX - 1/7 (Marsico International Opportunities Fund) MXXIX - 1/7 (Marsico 21st Century Fund) PGVFX - 1/7 (Polaris Global Value Fund)

Also I own a bit of the QQQQ fund as well.

Thanks

Reply to
thamsenman
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There is no 'optimum', unfortunately. Regular poster here, Elle, has a good set of links on her blog

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can help you decide for yourself. I do have a question for you - did you pick these in hindsight? When I looked at these funds, I believe every one beat the S&P over the last five years, and a couple were +100% vs S&P 20% or so. Just an observation. Past performance no guarantee, etc.

JOE

Reply to
joetaxpayer

Check here:

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It's been said that the best portfolio allocation is the one that allows you to sleep most comfortably at night.

Reply to
J M

The important issue is what are you saving for (hopefully retirement is the answer?). If saving for retirement in ~30-40 years, then "what makes sense" is probably AT LEAST 75% in equities. I am 33 and have

90% in equities. I own some funds which have convertables and own one foreign bond fund... but other than that, I take on the risks of equities expecting greater returns. There is no guarantee the additional risk will pay off, but conventional wisdom suggests this is the way to grow money.

foreign large value

mid blend

large growth

large growth

international large growth

large growth

world stock

It appears you chose 7 funds and contribute "equally" to each. Why?

It appears to me there are 3 large cap funds which more or less overlap and 3 international funds which more or less overlap. Consider some small cap, mid cap, large cap, domestic and international to find ~5-8 fund which make sense.

For example- Domestic Large Value fund X, Domestic Large Growth fund Y, Domestic Mid Cap fund Z, Domestic Small Cap fund AA, International Large Cap fund BB, International small cap fund CC. After choosing one fund in each of these 6 categories, possibly consider a technology fund (like QQQQ) or other ETF to use for around 2-5% of the overall portfolio.

Reply to
jIM

"J M" wrote

I like this, except I'd add ".., after reviewing the historical pros and cons of stocks, bonds, maybe real estate, and cash under a mattress." A person needs some awareness that she has plumbed all the options available in order to sleep soundly. Case in point: Yesterday Taddie suggested investigating master limited partnerships (traded as stocks on the New York Stock Exchange, for one) for income etc., and as a kind of electric utility version of REITs. After googling and looking at a few dozen specific ones, for a few strong reasons they do not currently seem a good choice. But in 20 years, they are something I might want to revisit, and I'll know they are out there. I believe I'm doing the best I can to ensure my income keeps up with inflation and then some, and with IMO little risk. I sleep well.

Reply to
Elle

Hello, You are young and are able to withstand some ups and downs. I would recommend some more aggressive international growth funds as the growth here is not as great. You may also look into insurance for yourself and family.

Al Thelife> Hi there,

Reply to
woolco2000

You've already got 2 international funds that are proximately 2/7 or 28% of your portfolio. I don't believe you really need to have MORE international funds for the reasons Al says.

So one market is performing better than another. Should you overweight in one to take advantage of an expecteded better perfromance?

No. That's market timing and it never works. Don't chase performance. You'll never know which asset class will out-perform each year, so you should develop a well-balanced asset allocation plan that invests across the board.

[Something I read in a prospectus once was "Past performance is no guarantee of future results". Maybe you've heard the expression? ;) ]

Also, if you're 21 years old, single, with no children, you probably don't need to be thinking about life insurance yet.

Make sure you've got a Roth IRA (if you're eligible) and max it out each year. Take advantage of your employer's 401k (if available).

One more thing, take everything you read on the net with a grain of salt and back it up with your own research.

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Reply to
J M

Reply to
jose.bailen

Joe,

Yeah I did pick these funds in hindsight. Mostly recommendations from friends and some of my own personal reading and research.

joetaxpayer wrote:

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Reply to
thamsenman

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