Asset Allocation Mutual Fund
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Ross Said:
What is best asset allocation for $300K to be used to supplement future income of 53 y/o low income woman?We Answered:
I would suggest looking at companies that pay dividends, particularly those that pay higher than the stock market's average. Dividend paying stocks provide a form of current income and usually have lower (reasonable) growth expectations priced in, so that you have a decent shot at capital appreciation, when and if value investing comes back in vogue. Since she's 53, I would consider her longevity into your asset allocation decision, as she likely has 30 + years of drawing down the portfolio, which would suggest an allocation mix with less fixed income securities, but again, that's where the dividend income helps out. Hope this helps you, good luck.Marvin Said:
Does my current retirement asset allocation seem appropriate?We Answered:
I'm a portfolio manager, and my opinion is that your portfolio is pretty risky. For an aggressive growth objective I would consider about 15% small cap, 15% international, 50% domestic large cap, and 20% in a taxable bond fund. For the large cap I would strongly consider using an S&P 500 Index fund.Vanguard offers a number of good low-cost, no-load mutual funds that would work very well for an investor in your situation. Of course you may not have that flexibility in a 401(k) plan.
Joel Said:
asset allocation?We Answered:
I have been sitting here for several minutes thinking about your question. Wouldn't it be nice if indeed there were an answer? If you look back through turning points in the market, you can certainly see at certain times pe ratio does give a very clear signal. When the market pe ratio gets above about 17 it is certainly time to become more cautious. Now markets have a tendency to occolate, so they can certainly shoot way above 17 and they can shoot way below 17. If I recall correctly back in 1968 the market pe went up into the 20s and it certainly did again in 2000. At the opposite extreme, when it gets below 10 one would think that there must be more than a few bargains to be had.There is a trade off between interest rates and potential stock returns. When interest rates are high obviously for potential stock returns to be an attractive alternative, they must be higher hence the pe lower and vica versa. Currently, interest rates are near zero. What does that suggest to you?
The kink in all of this is that markets tend to discount the future not the present. The future is an unknown, but there are certainly quite a few indicators that the future might not be all that great. Hence pe ratios are dropping despite very low interest rates.
Carrie Said:
Asset Allocation Puzzle?We Answered:
Basically, traditional investment advice ignores the impact of equity diversification on the reduction of risk. Correlation and volatility are persistent qualities of most well-managed mutual funds. Thus, the right mix of equity funds could be less volatile, and have more return, than a mix of bond and equity funds.The tools to research this concept can be found in the free FastTrack trial at http://www.fasttrack.net