Portfolio Allocation

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

JOE

Check here:

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

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

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.

"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.

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,

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.

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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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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