Is My Asset Allocation Good?

Asset Allocation

For my regular investment account I have the following asset allocation:

50% – Emerging Markets Funds
25% – S&P500 Fund
25% – Growth Fund

Should I invest more money into any one of these funds, or diversify a bit more and purchase other funds?

I am focusing on a 10 year horizon with this account so I am wondering if this asset allocation is good.

 Asset Allocation

Asset Allocation


It is good that you are looking at your retirement and taking into account diversification. There are some other questions that need to be answered before you should make any changes.

Asset Allocation Question #1. Are you 10 years from retirement or is this account designed to save for a different purpose?

Asset Allocation Question #2. What is your tolerance for risk? If the account increased or decreased by 20% in the next 12 months how would you feel? What about 50%?
Asset Allocation Question #3. Is this the only account you have for this purpose?

Asset Allocation Question #4. What is your investment experience?

Asset Allocation Question #5. Does this account need to be liquid?

Asset Allocation Question #6. Are you planning to take income out of this account in the next 10 years?

There are some obvious possible choices that are missing from your allocation. Options like bonds, developing markets, US small caps, US mid caps and REITs. You should also look at the underlying stocks in your current funds. There maybe some overlaping and this could mean you are not as diversified as you might currently think.

This is some starting information. The question you are asking is one that can not be answered without further investigation. It is similar to asking what is the best automobile for you to purchase? If gas mileage is important there is one answer. If you need to have the ability to carry several people then another. If you need to carry heavy loads then another still. You might consider having a professional review your plans just to help you stay on track. You can still manage your assets yourself, but this will insure that you are not missing something.

Asset Allocation