Asset Allocation
January 13, 2009 – 12:57 pmReplicated from Bernstein’s Four Pillars of Investing:
| I can tolerate losing ___ % of my portfolio in the course of earning higher returns: | Percent of my portfolio invested in stocks: |
| 35% | 80% |
| 30% | 70% |
| 25% | 60% |
| 20% | 50% |
| 15% | 40% |
| 10% | 30% |
| 5% | 20% |
| 0% | 10% |
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Basic Truths About Portfolio Management: A Consensus View Among the Experts
Simple Chart:
| Table 1. Asset Allocation for the “Typical” Investor: The Broad Consensus | |||
| Stocks (%) | Bonds (%) | Cash (%) | |
| High-risk investors; young investors | 70 - 80 | 15 - 25 | 0 - 5 |
| Medium risk investors; investors approaching retirement | 60 | 30 - 40 | 0 - 10 |
| Low-risk investors; retiring investors and retirees | 40 - 50 | 40 - 50 | 5 - 20 |
| Investors over age 70 | 20 - 30 | 60 | 10 - 20 |
2 Responses to “Asset Allocation”
Stingy Investor has an asset mixer here:
http://www.ndir.com/cgi-bin/downside_adv.cgi
By Patch on Jan 27, 2009
Determining a Master Portfolio Allocation:
http://www.nurseb911.com/2009/04/determining-master-portfolio-allocation.html
Here are some main principles I stick to with regards to each account.
Registered Savings Plan (RSP):
* Contributions eligible for tax rebate at your marginal tax rate
* All gains compound on a tax deferred basis
* Exempt from US withholding tax on dividends paid by US corporations
* 2009 individual contribution limit is 18% of annual income, but no more than $21,000
* Canadian paid dividends not eligible for dividend tax credit
* Must be converted to RRIF (registered retirement income fund) at age 71
Tax Free Savings Account (TFSA):
* Contributions not eligible for tax rebate
* All gains compound tax free
* Withholding tax on income paid as dividends from US corporations has not been indicated yet by the CRA on eligibility to exemption
* 2009 individual contribution limit is $5,000 regardless of income
* Canadian paid dividends not eligible for dividend tax credit
* No conversion necessary at any age
Non-Registered Account:
* Contributions not eligible for tax rebate
* All realized investment gains taxed directly at varying tax rates
* 15% of income paid in dividends from US corporations withheld
* No contribution limit
* Canadian dividends eligible for dividend tax credit
* No conversion necessary at any age
By Patch on Apr 14, 2009