Asset Allocation
Many of us have learned to do this on our own. We have paid heavy "tuition" to "sharks" in excess of what a good planner charges as we have learned how to do it. I will try and give a few fundamentals that you can build from or discuss with your financial planner.
"110% less your age"
I like the old "110% less your age" for equity asset allocation. This means if you are 40 then you have 110 less 40 or 70% in equities and 30% of your funds in fixed income. Also, if you are just out of college, then you can put all of your investments into equities.
Discuss Investing
In our Suite101 discussion area we discuss many different investments but one must remember to always keep in mind the "4% Rule" and your overall investment asset allocation before making changes. The "4% Rule" states simply that you put no more than 4% of your total investment capital into any single stock. You can extend this to "crazy schemes that telephone solicitors call you with", but you are best to keep these to 0% and just hang up the phone when they call.
In future articles, I will discuss more on asset allocation such as "how much into foreign vs US funds?" , "what are good fixed income investments" and "what is a good mix between large, mid and small cap stocks?" If you have specific or general questions, then I encourage you to ask them Click HERE after joining Suite101 which is FREE and promises not to spam you with email.
I've also started the Novice Corner for new investors.
Kirk's Recommended Books
I STRONGLY recommend everyone read these two books first before you spend ANY money on newsletters, financial plans, mutual funds, etc.
- The Lazy Person's Guide to Investing by Paul Farrell
"A simple and easy to understand book that offers many well diversified, indexed portfolios and data to show how well they work."
----- Kirk Lindstrom, editor Investing - Personal Finance at Suite101.com - The Four Pillars of Investing : Lessons for Building a Winning Portfolio by William J. Bernstein
"A Triumph! It is my candidate for the best investment book of 2002."
---- John Bogle, founder of the Vanguard Group.
Be very wary of anyone offering "free" financial advice. Usually they are selling you something that offers them a commission. This
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