What is a good portfolio mix?

What is a good portfolio mix?

Your ideal asset allocation is the mix of investments, from most aggressive to safest, that will earn the total return over time that you need. The mix includes stocks, bonds, and cash or money market securities. The percentage of your portfolio you devote to each depends on your time frame and your tolerance for risk.

What does a good diversified portfolio look like?

A diversified investment is a portfolio of various assets that earns the highest return for the least risk. A typical diversified portfolio has a mixture of stocks, fixed income, and commodities. Diversification works because these assets react differently to the same economic event.

Can a portfolio be too diversified?

Over diversification is possible as some mutual funds have to own so many stocks (due to the large amount of cash they have) that it's difficult to outperform their benchmarks or indexes. Owning more stocks than necessary can take away the impact of large stock gains and limit your upside.

How aggressive should my portfolio be?

Some young, aggressive investors will want to invest in 90 or even 100 percent stocks, whereas many conservative investors will never own 70 percent stocks at age 30, and that's OK. If you're new to investing, finding a comfortable allocation between stocks and bonds is a good start.

What is the best diversified portfolio?

For example, a balanced portfolio might consist of 25% dividend-paying blue-chip stocks, 25% small capitalization stocks, 25% AAA-rated government bonds, and 25% investment-grade corporate bonds. … For today's investors, the process of portfolio allocation is more accessible than ever before.

What does a good stock portfolio look like?

A good investment portfolio generally includes a range of blue chip and potential growth stocks, as well as other investments like bonds, index funds and bank accounts.

What percentage of portfolio should be cash?

A common-sense strategy may be to allocate no less than 5% of your portfolio to cash, and many prudent professionals may prefer to keep between 10% and 20% on hand at a minimum. Evidence indicates that the maximum risk/return trade-off occurs somewhere around this level of cash allocation.

How many funds should I have in my portfolio?

'Each individual fund in your portfolio will usually hold between 50-100 individual investments. Even if you held just three funds (an easy number to monitor), the total of underlying shares is probably 150-300 – that's a lot of diversification. '

Can you lose money in an index fund?

There are few certainties in the financial world, but there is almost zero chance that any index fund could ever lose all of its value. … Because index funds are low-risk, investors will not make the large gains that they might from high-risk individual stocks.

How do you build a good stock portfolio?

How Much Should I Save Versus How Much Should I Invest? … As a general rule, your savings should be sufficient to cover all of your personal expenses, including your mortgage, loan payments, insurance costs, utility bills, food, and clothing expenses for at least three to six months.

What should my investment mix be?

It simply states that you should take the number 100 and subtract your age. The result should be the percentage of your portfolio that you devote to equities like stocks. If you're 25, this rule suggests you should invest 75% of your money in stocks. And if you're 75, you should invest 25% in stocks.

What is a good portfolio diversity percentage?

Invest 10% to 25% of the stock portion of your portfolio in international securities. The younger and more affluent you are, the higher the percentage. Shave 5% off your stock portfolio and 5% off the bond portion, then invest the resulting 10% in real estate investment trusts (REITs).