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|Subject: Re: Is a 70/30 split ok for 33 yr old - coffeeho||Date: 1/18/2004 1:27 PM|
|Author: yobria||Number: 38623 of 77396|
>>I have my IRA split 70% equities and 30% bonds in a 7-fund coffeehouse portfolio.
Your allocation depends on two factors- your time horizon, and interest rates.
At 33, you retirement investments will likely be compounding for more than 30 years. With this time horzion, diversified stock returns have always outperformed bond returns. In fact, once you adjust for inflation and taxes, bonds barely tread water over the long term. Only stocks can provide substantial real growth.
Also, interest rates are at historic lows. That means a) bond yields are unappealing, and b) bond prices have a good bit of downside.
Given these factors, I agree with the group- put 100% of your long term financial wealth in equities.
I'm 31, and as of today have 120% of my financial portfolio in stocks (using some leverage), though home equity gives me some balance.
Whatever you do, remember to minimize the fees you pay the investment industry. I use Scottrade exclusively for my portfolio, and Scottrade and Vanguard for my Mother's money, which I manage.
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