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| 5/24 |
| 2005/9/9-12 [Finance/Investment] UID:39588 Activity:nil |
9/9 Whoa. I'm saving about 50% of my take-home. What's the canonnical
asset class mix for investing money to be used in 5 years?
\_ I'm in a similar position, although I am certainly no
investment guru. I think for short term it's usually about 20%
equity, 80% bonds. This is about what I'm doing. I'm
getting 5.5% on the bonds right now.
\_ To be used for what? An idea of your goals would help.
\_ world domination, duh.
\_ 50% is a lot. Big salary, not that much expenses?
What are your goals with your extra money?
\_ Yes, yes. Marriage/house/kids.
\_ Found this on google:
http://personal.fidelity.com/planning/retirement/saving/content/strategies.shtml
http://tinyurl.com/bgrtj
\_ Bonds, according to SmartMoney. |
| 5/24 |
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| personal.fidelity.com/planning/retirement/saving/content/strategies.shtml For the retirement investor, time can be your best ally. Typically, the l onger your investments have to grow in an IRA, SEP, SIMPLE, 401, Self -Employed 401, or annuity, the better off you may be when you're read y to retire. Planning Your Asset Allocation But time is not the only factor that affects the growth of your accounts. Asset allocation the way you distribute your money among stocks, bond s, and short-term investments can affect the returns you may achieve. A thoughtfully allocated plan can help reduce the risk that the returns in your retirement savings portfolio don't depend on the performance of any one type of investment. Find the mix that fits your tolerance for ri sk and your timetable for when you'll need the money. Once you've made t hat crucial decision, choose your specific investments and stick to your plan. Choosing Your Investments Most employer-sponsored retirement plans offer a selection of investment options spanning the risk/return spectrum from aggressive to conservativ e IRA and small business retirement plan assets can typically be invest ed in mutual funds, stocks, bonds, or more conservative investments like CDs or treasuries. When choosing your investments, ask yourself three questions. The longer your time horizon, the m ore aggressive you may want your target asset mix to be, depending on yo ur risk tolerance. If every twist and turn keeps you up nights, you may find more peace-of-mind in a more con servative allocation. For most investors, their retirement assets are the largest amount of money they will manage. The sample portfolios below are examples of asset allocations arranged ac cording to time horizon. Most Aggressive Portfolio asset allocation 80% Domestic Equities, 20% For eign Equities Most Aggressive Portfolio Time Horizon: More than 10 years This target asset mix may be appropriate for investors who seek very aggr essive growth and who can tolerate very wide fluctuations in market valu es, especially over the short term. Aggressive Growth Portfolio asset allocation 70% Domestic Equities, 15% F oreign Equities, 15% Bonds Aggressive Growth Portfolio Time horizon: more than 10 years This target asset mix may be appropriate for investors who seek aggressiv e growth and who can tolerate wide fluctuations in market values, especi ally over the short term. Growth Portfolio asset allocation 60% Domestic Equities, 10% Foreign Equi ties, 25% Bonds, 5% Short-Term Growth Portfolio Time horizon: more than 5 years This target asset mix may be appropriate for investors who have a prefere nce for growth and who can withstand significant fluctuations in market value. Balanced Portfolio asset allocation 45% Domestic Equities, 5% Foreign Equ ities, 40% Bonds, 10% Short-Term Balanced Portfolio Time horizon: less than 5 years This target asset mix may be appropriate for investors who want the poten tial for capital appreciation and some growth and who can withstand mode rate fluctuations in market value. Conservative asset allocation 20% Domestic Equities, 50% Bonds, 30% Short -Term Conservative Portfolio Time horizon: less than 5 years This target asset mix may be appropriate for investors who want to minimi ze fluctuations in market values by taking an income-oriented approach w ith some potential for capital appreciation. Short Term Portfolio asset allocation 100% Short-Term Short Term Portfoli o Time horizon: n/a This target asset mix may be appropriate for investors who want to preser ve their capital and can accept the lowest returns in exchange for price stability. Asset Allocation and Earnings Consider two hypothetical investors. By the time they were age 35, Mark a nd Nancy had each had $30,000 invested in an IRA earmarked for retiremen t Nancy never made another contribution, but her investments returned 9 % a year. Mark continued to contribute $3,000 each year, but was more co nservative than Nancy and only achieved a 4% return each year. Although she had not made additional contributions, after 30 years, Nancy had accumulated more money in her account. Since Nancy's more aggr essive asset allocation (and greater risk), earned her 9% a year, it has allowed her initial deposit to not just keep up with Mark's account but to actually surpass it. Imagine how much more her assets could have gro wn if she had also made annual contributions! Chart showing hypothetical returns in two portfolios invested with differ ent asset allocations. Of course, past performance is no guarantee of future results. Your investment s may earn more or less than this example. Tools and Services to Help From seminars at our branches to online tools and resources, Fidelity can help you establish an investment strategy that fits your needs. Retirement Seminars Seminars on a variety of topics are held at Fidelity branch offices aroun d the country. Fidelity Portfolio Planner: Portfolio Review - In this tool, Fide lity offers straightforward, specific guidance including analysis of y our portfolio, asset allocations, and mutual fund recommendations so y ou can fine-tune your portfolio to help meet your financial goals. Portfolio Analysis (requires login) - Get a better idea of how yo ur portfolio is diversified. This tool categorizes your investments into asset classes, including "look through" for mutual funds, giving you a more detailed analysis. |
| tinyurl.com/bgrtj -> personal.fidelity.com/planning/retirement/saving/content/strategies.shtml For the retirement investor, time can be your best ally. Typically, the l onger your investments have to grow in an IRA, SEP, SIMPLE, 401, Self -Employed 401, or annuity, the better off you may be when you're read y to retire. Planning Your Asset Allocation But time is not the only factor that affects the growth of your accounts. Asset allocation the way you distribute your money among stocks, bond s, and short-term investments can affect the returns you may achieve. A thoughtfully allocated plan can help reduce the risk that the returns in your retirement savings portfolio don't depend on the performance of any one type of investment. Find the mix that fits your tolerance for ri sk and your timetable for when you'll need the money. Once you've made t hat crucial decision, choose your specific investments and stick to your plan. Choosing Your Investments Most employer-sponsored retirement plans offer a selection of investment options spanning the risk/return spectrum from aggressive to conservativ e IRA and small business retirement plan assets can typically be invest ed in mutual funds, stocks, bonds, or more conservative investments like CDs or treasuries. When choosing your investments, ask yourself three questions. The longer your time horizon, the m ore aggressive you may want your target asset mix to be, depending on yo ur risk tolerance. If every twist and turn keeps you up nights, you may find more peace-of-mind in a more con servative allocation. For most investors, their retirement assets are the largest amount of money they will manage. The sample portfolios below are examples of asset allocations arranged ac cording to time horizon. Most Aggressive Portfolio asset allocation 80% Domestic Equities, 20% For eign Equities Most Aggressive Portfolio Time Horizon: More than 10 years This target asset mix may be appropriate for investors who seek very aggr essive growth and who can tolerate very wide fluctuations in market valu es, especially over the short term. Aggressive Growth Portfolio asset allocation 70% Domestic Equities, 15% F oreign Equities, 15% Bonds Aggressive Growth Portfolio Time horizon: more than 10 years This target asset mix may be appropriate for investors who seek aggressiv e growth and who can tolerate wide fluctuations in market values, especi ally over the short term. Growth Portfolio asset allocation 60% Domestic Equities, 10% Foreign Equi ties, 25% Bonds, 5% Short-Term Growth Portfolio Time horizon: more than 5 years This target asset mix may be appropriate for investors who have a prefere nce for growth and who can withstand significant fluctuations in market value. Balanced Portfolio asset allocation 45% Domestic Equities, 5% Foreign Equ ities, 40% Bonds, 10% Short-Term Balanced Portfolio Time horizon: less than 5 years This target asset mix may be appropriate for investors who want the poten tial for capital appreciation and some growth and who can withstand mode rate fluctuations in market value. Conservative asset allocation 20% Domestic Equities, 50% Bonds, 30% Short -Term Conservative Portfolio Time horizon: less than 5 years This target asset mix may be appropriate for investors who want to minimi ze fluctuations in market values by taking an income-oriented approach w ith some potential for capital appreciation. Short Term Portfolio asset allocation 100% Short-Term Short Term Portfoli o Time horizon: n/a This target asset mix may be appropriate for investors who want to preser ve their capital and can accept the lowest returns in exchange for price stability. Asset Allocation and Earnings Consider two hypothetical investors. By the time they were age 35, Mark a nd Nancy had each had $30,000 invested in an IRA earmarked for retiremen t Nancy never made another contribution, but her investments returned 9 % a year. Mark continued to contribute $3,000 each year, but was more co nservative than Nancy and only achieved a 4% return each year. Although she had not made additional contributions, after 30 years, Nancy had accumulated more money in her account. Since Nancy's more aggr essive asset allocation (and greater risk), earned her 9% a year, it has allowed her initial deposit to not just keep up with Mark's account but to actually surpass it. Imagine how much more her assets could have gro wn if she had also made annual contributions! Chart showing hypothetical returns in two portfolios invested with differ ent asset allocations. Of course, past performance is no guarantee of future results. Your investment s may earn more or less than this example. Tools and Services to Help From seminars at our branches to online tools and resources, Fidelity can help you establish an investment strategy that fits your needs. Retirement Seminars Seminars on a variety of topics are held at Fidelity branch offices aroun d the country. Fidelity Portfolio Planner: Portfolio Review - In this tool, Fide lity offers straightforward, specific guidance including analysis of y our portfolio, asset allocations, and mutual fund recommendations so y ou can fine-tune your portfolio to help meet your financial goals. Portfolio Analysis (requires login) - Get a better idea of how yo ur portfolio is diversified. This tool categorizes your investments into asset classes, including "look through" for mutual funds, giving you a more detailed analysis. |