A guide to baskets, eggs, and how to organize your investments. Updated: Nov 10, 2016 at 8:00PM So how does all this come together in the form of an actual asset allocation? Below are three model portfolios you can use as a starting point for cooking your own investment soup, followed by descriptions of the asset classes. (Note: We did not include cash in these allocations. We're assuming you have the money you need in the next year, as well as an emergency fund, already sitting safely in a money market account or similar investment. ) We've used five broad categories that could serve as the foundation of your portfolio. The categories can be further sliced and diced; in fact, the Model Portfolios we discuss in Rule Your Retirement feature 12 different asset classes. But these five will set you firmly on the path to a well-diversified nest egg. We've also thrown in a representative exchange-traded fund (ETF) for each asset class, so you can get an idea of what kinds of investments fall under each category, as well as a cheap and easy way to implement this core portfolio: Asset class ETF Conservative Moderate Aggressive Large-cap U. S. stocks SPDR (AMEX: SPY) 20% 30% 40% Small-cap U. stocks iShares S&P 600 (AMEX: IJR) 5% 10% Foreign stocks iShares MSCI EAFE (AMEX: EFA) REITs SPDR DJ Wilshire REIT (AMEX: RWR) Bonds iShares Lehman Brothers Aggregate Bond (AMEX: AGG) 60% 15% An allocation adieu Congratulations, Fool!
You know you need to save for retirement, and you know that generally means investing. The tough question is: Where should you invest your money? There are thousands of mutual funds for retirement from which to choose. Of course, if you're investing through a workplace retirement plan, such as a 401(k), your choices are limited. Still, if you feel like the opposite of a savvy stock picker, those choices might seem like too many. Here's the good news: It doesn't have to be that complicated. You can create a smart, diversified investment portfolio with just a handful of mutual funds for retirement. Why you don't need a lot of mutual funds for retirement One key to successful investing is to make sure your investments are diversified. You want your investments to be spread out over a lot of companies in different industries and locales. That way, even if one company or industry starts to suffer, the others are unlikely to follow suit. And those occasional times when all stocks seem to be in free fall?
Managing paper clutter—and seeing to the safe disposal of those sensitive documents--can be time-consuming and may also distract you from your core jobs: keeping your portfolio on track and making sure it delivers you the cash flow you need. Moreover, all those paper statements may be costing you money, as many investment providers now charge extra for paper document delivery. © Copyright Morningstar, Inc. All rights reserved. What to read next... Let's look at a few common myths about saving for retirement and then get the real story. Read on to learn more. A very important part of the planning process when leaving an old employer is knowing what to do with your old retirement plan. Looking to expand your financial knowledge?
Nothing surprising if you are familiar with the Canadian stock market. Perhaps you already own them all. Enbridge and TC Energy still meet the requirements but there is pressure from an oil consumption and environment perspective. You could decide to have none, one or both. One option is to swap with life insurance stocks. There are 10 stocks. All solid blue chip stocks from a Canadian perspective and if you were to have $50K in each, that would be worth $500, 000 with an income of $22, 000 or a 4. 42% yield. There are other names you can add but I consider those the core stocks for a Canadian retirement portfolio. Feel free to swap a bank or a telecom, both industries are pretty much an oligopoly and will be protected by the Canadian government for the foreseeable future. You get an approximate dividend growth of 4% which means you could still have a lower yield stock like CNR or CP if you want. I intend to reduce my high growth dividend stocks to reach represent no more than 3% of my portfolio.
My Money Blog has partnered with CardRatings and Credit-Land for selected credit cards and may receive a commission. All opinions expressed are the author's alone, and has not been provided nor approved by any of the companies mentioned. In my rough guide to investing, I suggested some all-in-one mutual funds for beginners. But what if you want to go a step further and design your own portfolio? Or you have a 401k with only limited choices? Of course, the best answer is always to read some good books. But another idea I've been meaning to do for a while is to collect the model portfolios from lots of different reputable books and sources and compare them to each other. You won't see any individual stock picks here, all the sources will be based (at least loosely) upon modern portfolio theory and thus focus on optimizing the risk/reward ratio using proper asset allocation. I think it should go without saying that since these are model portfolios, they are imperfect by design and at most should serve as rough guidelines for your own investing.
In general, the younger you are, the greater percentage of your assets should be in the stock market, as that's likely to grow faster than most alternatives. As you age, it makes sense to shift some assets into bonds, which tend to grow more slowly, but can offer a little more stability and diversification. It's also smart to have some cash on hand for emergencies, or to be able to quickly take advantage of opportunities, such as a great stock that temporarily plunges in price, or a downturn in the entire market. A model portfolio for retirees will have a chunk of its assets in bonds (with the specific percentage depending, in part, on your risk tolerance), but it shouldn't avoid stocks. Even if you're 70 and have been retired for five years, you may still live to 90, meaning that some of your portfolio has many more years to grow. You can aim to build your nest egg by including some growth stocks in your investment portfolio, too. Don't go too crazy with unproven companies, but it's reasonable to look at big, established companies that are still growing briskly, have competitive advantages, and have more room to grow.
I've also avoided investing more than 20% in a specific sector. This ensures a strong diversification to go through any kind of crisis. Those portfolios are obviously exclusive to DSR members. All subscriptions give you full access to all DSR features including: Our DSR members' favorite – a unique library of 200+ stock cards (powerful 2 pagers of actionable info on companies you should follow). A starting point to ease your mind – we have 13 portfolio models including booklets and quarterly analysis. A fast way to identify undervalued stocks – our Rock Solid Ranking tracks 200+ stocks and provide upside potential. An answer to "when should I buy? sell? " – we send you all our trades with our investment thesis behind it. Lots of free time to enjoy life – we go through the market to find the most interesting companies and we provide you with actionable content. A personal assistant that does all the work for you – we have reviewed over 200 dividend stocks on the site, you can ask us to review any stocks in your portfolio.