No. of Recommendations: 0
Generally, for someone who is getting more money than they need to survive, the most important part is risk vs. reward. Take a look at the Efficient Frontier charts in http://www.intelligencereport.com/. The best risk/reward points, corrected for inflation, tend to be around 60% bonds/40% equities (slightly better reward than the lowest risk point, which is 75% bonds/25% equities). As far as equities, the best risk/reward point is near 50% stocks/50% REITs. The longer the money can sit, the higher weighting for equities and the higher weighting for stocks. So a good point might be 60% bonds (of which around half can be government bonds), 20% stocks (maybe an index fund), and 20% REIT (another mutual fund).

Risk is defined as the standard deviation of the value of the equity from its trend line. Higher risk generally leads to higher return, but also to more volatility.


Good stuff Russ. Thanks!

Splotto
Print the post  

Announcements

What was Your Dumbest Investment?
Share it with us -- and learn from others' stories of flubs.
When Life Gives You Lemons
We all have had hardships and made poor decisions. The important thing is how we respond and grow. Read the story of a Fool who started from nothing, and looks to gain everything.
Community Home
Speak Your Mind, Start Your Blog, Rate Your Stocks

Community Team Fools - who are those TMF's?
Contact Us
Contact Customer Service and other Fool departments here.
Work for Fools?
Winner of the Washingtonian great places to work, and Glassdoor #1 Company to Work For 2015! Have access to all of TMF's online and email products for FREE, and be paid for your contributions to TMF! Click the link and start your Fool career.
Advertisement