sharonpedrosa
Recognized member
Asset allocation is a strategy that helps you choose how much money to put in stocks, bonds and cash when you invest for retirement. Simply put, asset allocation is nothing more than striking a balance among these three core asset classes.
If you’re okay with a slightly hands-on approach but prefer to keep things easy, invest for retirement with a simple asset allocation model. A two- or three-fund portfolio based on mutual funds and exchange-traded funds (ETFs) makes it very easy to invest and save for retirement.
One fund targets growth, like an S&P 500 index fund or an international stock index fund. The second fund, like a total bond market fund, generates stable income. Diversify further with a third broad-market ETF or index fund. Asset allocation with only two or three funds still provides diversification, and it keeps you from having to pick and choose tons of stocks or bonds yourself.
Next, decide what percentage of your portfolio balance is invested in these two or three stock and bond funds. Your decision depends on your age and how well you tolerate risk. Investment management firm T. Rowe Price suggests the following simple allocation based on your age:
And as you age, you’ll need to rebalance to keep your portfolio in line with your desired risk tolerance. You can see this in the asset allocations above, which become more conservative—with more fixed-income, bond investments—as you get closer to retirement.
What i just shared is based on my research. I actually employed the services of a financial adviser doubled as a broker by name Stacy Marie Filkins. She handles all that pertains to my investment and trades. It’s best you reach out to a professional to avoid making mistakes and costly ones at that.
If you’re okay with a slightly hands-on approach but prefer to keep things easy, invest for retirement with a simple asset allocation model. A two- or three-fund portfolio based on mutual funds and exchange-traded funds (ETFs) makes it very easy to invest and save for retirement.
One fund targets growth, like an S&P 500 index fund or an international stock index fund. The second fund, like a total bond market fund, generates stable income. Diversify further with a third broad-market ETF or index fund. Asset allocation with only two or three funds still provides diversification, and it keeps you from having to pick and choose tons of stocks or bonds yourself.
Next, decide what percentage of your portfolio balance is invested in these two or three stock and bond funds. Your decision depends on your age and how well you tolerate risk. Investment management firm T. Rowe Price suggests the following simple allocation based on your age:
- 20s & 30s: 90% to 100% stocks, zero to 10% bonds
- 40s: 80% to 100% stocks, zero to 20% bonds
- 50s: 65% to 85% stocks, 15% to 35% bonds
- 60s: 45% to 65% stocks, 30% to 50% bonds, zero to 10% cash/cash-equivalents
- 70+: 30% to 50% stocks, 40% to 60% bonds, zero to 20% cash/cash-equivalents
And as you age, you’ll need to rebalance to keep your portfolio in line with your desired risk tolerance. You can see this in the asset allocations above, which become more conservative—with more fixed-income, bond investments—as you get closer to retirement.
What i just shared is based on my research. I actually employed the services of a financial adviser doubled as a broker by name Stacy Marie Filkins. She handles all that pertains to my investment and trades. It’s best you reach out to a professional to avoid making mistakes and costly ones at that.