Comments on: Asset Allocation for Investors Under Thirty http://www.moneyunder30.com/asset-allocation-for-investors-under-thirty Simple, Honest Financial Advice Thu, 09 Feb 2012 22:53:06 +0000 hourly 1 http://wordpress.org/?v=3.2.1 By: Bill http://www.moneyunder30.com/asset-allocation-for-investors-under-thirty/comment-page-1#comment-14142 Bill Fri, 18 Nov 2011 18:08:26 +0000 http://www.moneyunder30.com/asset-allocation-for-investors-under-thirty#comment-14142 I'm 23 and I just started my first job post college. I have about $5,000 with no debt and can afford to add $300 a month. I want to invest in 2012. I want to set up a nice plan for myself. I don't mind taking moderate risks but I also don't want to lose everything. How shoulld invest my money over the next 7 years. What percentage should I keep where? I’m 23 and I just started my first job post college. I have about $5,000 with no debt and can afford to add $300 a month. I want to invest in 2012. I want to set up a nice plan for myself. I don’t mind taking moderate risks but I also don’t want to lose everything. How shoulld invest my money over the next 7 years. What percentage should I keep where?

]]> By: Nathan http://www.moneyunder30.com/asset-allocation-for-investors-under-thirty/comment-page-1#comment-5434 Nathan Thu, 13 May 2010 16:01:59 +0000 http://www.moneyunder30.com/asset-allocation-for-investors-under-thirty#comment-5434 My comment is a bit late to this original posting, however I wanted to add my $0.02. I agree with the aggressive approach when you are younger, have a longer investment horizon and strong future earning capacity to make up potential losses. Of course, that probably only makes sense if you can handle the ups and downs, and can "stay the course" with your allocation, gradually reducing risk over time. If you sell all of the riskier assets at the first BIG drop and put everything in cash, it may not work out as well in practice. Regarding specific asset classes, I prefer to have a decent exposure to foreign (about 25% total, with 10% in emerging), however am hesitant to go much beyond that because of the currency risk you alluded to. I'm don't want to try to time currency markets, as I have no clue whether a weakened dollar over the last ten years means the trend will continue, or its due for an uptick against the world currencies, nor do I want to guess. I find some added safety in 75% of my portfolio being in investments that are in US dollars, so that I don't have to worry too much about it. I do, however, have larger exposure to small and mid-cap stocks approaching 40% (typically Index funds) expecting that this may be a potentially higher risk/reward class compared with large cap stocks. My comment is a bit late to this original posting, however I wanted to add my $0.02. I agree with the aggressive approach when you are younger, have a longer investment horizon and strong future earning capacity to make up potential losses. Of course, that probably only makes sense if you can handle the ups and downs, and can “stay the course” with your allocation, gradually reducing risk over time. If you sell all of the riskier assets at the first BIG drop and put everything in cash, it may not work out as well in practice.

Regarding specific asset classes, I prefer to have a decent exposure to foreign (about 25% total, with 10% in emerging), however am hesitant to go much beyond that because of the currency risk you alluded to. I’m don’t want to try to time currency markets, as I have no clue whether a weakened dollar over the last ten years means the trend will continue, or its due for an uptick against the world currencies, nor do I want to guess. I find some added safety in 75% of my portfolio being in investments that are in US dollars, so that I don’t have to worry too much about it. I do, however, have larger exposure to small and mid-cap stocks approaching 40% (typically Index funds) expecting that this may be a potentially higher risk/reward class compared with large cap stocks.

]]> By: Keith http://www.moneyunder30.com/asset-allocation-for-investors-under-thirty/comment-page-1#comment-776 Keith Sun, 23 Nov 2008 08:00:18 +0000 http://www.moneyunder30.com/asset-allocation-for-investors-under-thirty#comment-776 If you are investing in your own IRA and you are under 30, having an aggressive stock portfolio makes long term sense. But in my personal experience, an aggressive strategy in an employer 401K (which most of us have) is essentially a giant gamble. Any time you change jobs or get laid off, you have to "cash out" and roll your money into either an IRA or another employer's 401k. You lose all benefits of an aggressive long term strategy. If your investment lost 25% there is no way of waiting until your fund shares bounce back. How many of us can say we will be at the same job/401k for 40 years? If you are investing in your own IRA and you are under 30, having an aggressive stock portfolio makes long term sense.

But in my personal experience, an aggressive strategy in an employer 401K (which most of us have) is essentially a giant gamble.

Any time you change jobs or get laid off, you have to “cash out” and roll your money into either an IRA or another employer’s 401k. You lose all benefits of an aggressive long term strategy. If your investment lost 25% there is no way of waiting until your fund shares bounce back.

How many of us can say we will be at the same job/401k for 40 years?

]]> By: Tom http://www.moneyunder30.com/asset-allocation-for-investors-under-thirty/comment-page-1#comment-775 Tom Mon, 31 Mar 2008 14:18:22 +0000 http://www.moneyunder30.com/asset-allocation-for-investors-under-thirty#comment-775 @Jon - Actively managed ETF? That's a bit counter-intuitive. The main benefits of ETFs are they are traded like stocks, act like mutual funds, and have low low Expense Ratios. I think I'll be staying away from those ETFs. Also, if you don't know what ETFs are, check out "The ETF Book", that'll explain it in great detail. @Jon – Actively managed ETF? That’s a bit counter-intuitive. The main benefits of ETFs are they are traded like stocks, act like mutual funds, and have low low Expense Ratios. I think I’ll be staying away from those ETFs. Also, if you don’t know what ETFs are, check out “The ETF Book”, that’ll explain it in great detail.

]]> By: Jon http://www.moneyunder30.com/asset-allocation-for-investors-under-thirty/comment-page-1#comment-774 Jon Fri, 28 Mar 2008 01:43:24 +0000 http://www.moneyunder30.com/asset-allocation-for-investors-under-thirty#comment-774 I think the author needs to make clear what exactly ETFs are - specifically that they can be based on a bond exchange or a stock exchange, and can be extremely risky or very conservative. You can't really say that a conservative portfolio usually contains ETFs or that an aggressive strategy will only have 5-10% ETFs and bonds. I am 25 and have a very aggressive asset allocation, but my holdings are all held in ETFs (40% us stocks, 40% foreign, 10% bonds, 10% TIPs). There are even companies filing to run the first actively managed ETF. I think the author needs to make clear what exactly ETFs are – specifically that they can be based on a bond exchange or a stock exchange, and can be extremely risky or very conservative. You can’t really say that a conservative portfolio usually contains ETFs or that an aggressive strategy will only have 5-10% ETFs and bonds. I am 25 and have a very aggressive asset allocation, but my holdings are all held in ETFs (40% us stocks, 40% foreign, 10% bonds, 10% TIPs). There are even companies filing to run the first actively managed ETF.

]]> By: David http://www.moneyunder30.com/asset-allocation-for-investors-under-thirty/comment-page-1#comment-773 David Tue, 25 Mar 2008 13:41:13 +0000 http://www.moneyunder30.com/asset-allocation-for-investors-under-thirty#comment-773 The author of this article probably shouldn't be giving this advice or, at least, people should take it with a grain of salt. The author presents a false dichotomy between growth and income assets when its actually growth and value that are opposing forces (although, still not a true dichotomy). This concept is very basic to investing and the lack of understanding or knowledge about value stocks that the author demonstrates is a huge gap because Small Value stocks have been the most rewarding asset class - even more than Small Growth - over the last 50+ years. That said, I like the idea of heavy foreign investments. The author of this article probably shouldn’t be giving this advice or, at least, people should take it with a grain of salt. The author presents a false dichotomy between growth and income assets when its actually growth and value that are opposing forces (although, still not a true dichotomy). This concept is very basic to investing and the lack of understanding or knowledge about value stocks that the author demonstrates is a huge gap because Small Value stocks have been the most rewarding asset class – even more than Small Growth – over the last 50+ years.

That said, I like the idea of heavy foreign investments.

]]> By: Stan http://www.moneyunder30.com/asset-allocation-for-investors-under-thirty/comment-page-1#comment-772 Stan Tue, 25 Mar 2008 02:10:07 +0000 http://www.moneyunder30.com/asset-allocation-for-investors-under-thirty#comment-772 The standard caveat "past returns are no guarantee of future results" ought surely to apply to the question of political stability as well. Are "foreign" countries really likely to be less stable than the USA over the next 30 years? For one thing, at the risk of stating the obvious, not all "foreign" countries are created equal. (By "foreign" did you mean Somalia? or Brazil? or Japan?) And secondly, I wouldn't be smug about assuming that the USA is the single-least likely country to have major domestic unrest over the next 30 years. Around 1/2 of the world's market cap is in US companies... which means around 1/2 is NOT in US companies. Am I the only one imagining that the latter proportion is likely to go up significantly over the next 30 years? The standard caveat “past returns are no guarantee of future results” ought surely to apply to the question of political stability as well. Are “foreign” countries really likely to be less stable than the USA over the next 30 years? For one thing, at the risk of stating the obvious, not all “foreign” countries are created equal. (By “foreign” did you mean Somalia? or Brazil? or Japan?) And secondly, I wouldn’t be smug about assuming that the USA is the single-least likely country to have major domestic unrest over the next 30 years.

Around 1/2 of the world’s market cap is in US companies… which means around 1/2 is NOT in US companies. Am I the only one imagining that the latter proportion is likely to go up significantly over the next 30 years?

]]> By: Reece http://www.moneyunder30.com/asset-allocation-for-investors-under-thirty/comment-page-1#comment-771 Reece Fri, 21 Mar 2008 04:24:29 +0000 http://www.moneyunder30.com/asset-allocation-for-investors-under-thirty#comment-771 Wow, thanks for giving me a good first look into investing. As an 18 year old ambitious high school student the only people i ever get any info from are my teachers, some of them dont know what they are talking about, others are pretty knowledgeable. Im am now thinking about going with the good aggressive strategy. Wow, thanks for giving me a good first look into investing. As an 18 year old ambitious high school student the only people i ever get any info from are my teachers, some of them dont know what they are talking about, others are pretty knowledgeable. Im am now thinking about going with the good aggressive strategy.

]]> By: Amy http://www.moneyunder30.com/asset-allocation-for-investors-under-thirty/comment-page-1#comment-770 Amy Mon, 17 Mar 2008 23:59:22 +0000 http://www.moneyunder30.com/asset-allocation-for-investors-under-thirty#comment-770 I just wanted to thank you for writing an article that goes beyond the basics for those in our age group. I'm very interested in finances, am constantly reading books and magazines about it, but often have a hard time finding articles which go beyond the typical advice for younger adults. For instance, I subscribe to Money magazine and over half of the articles are geared towards those on the verge of retirement. I was glad to see that you also invest in Fidelity's International Discovery Fund. I found that about a year ago when rolling over my old 401K to a Roth. I have been happy with it so far, especially considering the markets right now. I look forward to reading what you post next! I just wanted to thank you for writing an article that goes beyond the basics for those in our age group. I’m very interested in finances, am constantly reading books and magazines about it, but often have a hard time finding articles which go beyond the typical advice for younger adults. For instance, I subscribe to Money magazine and over half of the articles are geared towards those on the verge of retirement.

I was glad to see that you also invest in Fidelity’s International Discovery Fund. I found that about a year ago when rolling over my old 401K to a Roth. I have been happy with it so far, especially considering the markets right now.

I look forward to reading what you post next!

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