inquisitive
Recycles dryer sheets
- Joined
- Apr 7, 2008
- Messages
- 223
I finished reading Ferri's book, which was recommended here recently, created my first ever asset allocation plan, and would appreciate feedback. It is for a retirement account. I have access to funds through Fidelity and just looked at NTF funds. I think I have a high risk tolerance, although Ferri writes about how people generally overestimate their tolerance for risk. I am willing to start with this allocation and see if I maintain it. I am in my late twenties and am planning on rebalancing once/year. The rough percentages are to the right. The expense ratios range from 0.10% to 1.12%. I summarized the division by country and type of investment below.
[FONT=Verdana, Arial, Helvetica, sans-serif]Fidelity Spartan® Real Estate Idx Inv[/FONT][FONT=Verdana, Arial, Helvetica, sans-serif] 9.62[/FONT]
[FONT=Verdana, Arial, Helvetica, sans-serif]Fidelity® China Region[/FONT][FONT=Verdana, Arial, Helvetica, sans-serif] 9.49[/FONT]
[FONT=Verdana, Arial, Helvetica, sans-serif]Matthews Korea Investor[/FONT][FONT=Verdana, Arial, Helvetica, sans-serif] 9.55[/FONT]
[FONT=Verdana, Arial, Helvetica, sans-serif]Fidelity® International Discovery[/FONT][FONT=Verdana, Arial, Helvetica, sans-serif] 9.50[/FONT]
[FONT=Verdana, Arial, Helvetica, sans-serif]Fidelity® Select Biotechnology Portfolio[/FONT][FONT=Verdana, Arial, Helvetica, sans-serif] 4.78[/FONT]
[FONT=Verdana, Arial, Helvetica, sans-serif]Fidelity® Select Medical Delivery Port[/FONT][FONT=Verdana, Arial, Helvetica, sans-serif] 4.74[/FONT]
[FONT=Verdana, Arial, Helvetica, sans-serif]Fidelity® Select Utilities Portfolio[/FONT][FONT=Verdana, Arial, Helvetica, sans-serif] 4.77[/FONT]
[FONT=Verdana, Arial, Helvetica, sans-serif]Fidelity® Nordic[/FONT][FONT=Verdana, Arial, Helvetica, sans-serif] 9.50[/FONT]
[FONT=Verdana, Arial, Helvetica, sans-serif]Fidelity® Latin America[/FONT][FONT=Verdana, Arial, Helvetica, sans-serif] 9.54[/FONT]
[FONT=Verdana, Arial, Helvetica, sans-serif]Fidelity Spartan® Extended Mkt Index Inv[/FONT][FONT=Verdana, Arial, Helvetica, sans-serif] 9.52[/FONT]
[FONT=Verdana, Arial, Helvetica, sans-serif]Matthews Asia Growth Investor[/FONT][FONT=Verdana, Arial, Helvetica, sans-serif] 9.46[/FONT]
[FONT=Verdana, Arial, Helvetica, sans-serif]Matthews India Investor[/FONT][FONT=Verdana, Arial, Helvetica, sans-serif] 9.53[/FONT]
Total: 88% stock, 12% real estate
Country Breakdown
United States – 33%
Latin America – 9.5%
South Korea – 9.5%
India – 9.5%
Sweden/Denmark/Finland 9.0%
Japan – 6.4%
Other Europe – 5.5%
Other Asia – 4.3%
China 4.2%
Hong Kong 2.9%
Taiwan 1.2%
Other or combination of above – 5%
I calculated 3 year correlation coefficients of all mutual funds against each other, took the average of all of them (not sure if this is the right way to do it) and got a mean correlation of 0.59. There is a lot of diversification, both geographically and currency.
There are no bonds, which is because I have a long time horizon, the long-term performance of stocks is higher than bonds, and I am willing to experience temporary drawdowns. If interest rates rise I don't think the returns of bonds the last few years will persist. I don't know much about bonds and am open to arguments for including them and would purchase some if I thought their long-term performance would exceed stocks. If I was to buy bonds I would be interested in corporate and perhaps emerging market bonds.
Thanks for any input!
[FONT=Verdana, Arial, Helvetica, sans-serif]Fidelity Spartan® Real Estate Idx Inv[/FONT][FONT=Verdana, Arial, Helvetica, sans-serif] 9.62[/FONT]
[FONT=Verdana, Arial, Helvetica, sans-serif]Fidelity® China Region[/FONT][FONT=Verdana, Arial, Helvetica, sans-serif] 9.49[/FONT]
[FONT=Verdana, Arial, Helvetica, sans-serif]Matthews Korea Investor[/FONT][FONT=Verdana, Arial, Helvetica, sans-serif] 9.55[/FONT]
[FONT=Verdana, Arial, Helvetica, sans-serif]Fidelity® International Discovery[/FONT][FONT=Verdana, Arial, Helvetica, sans-serif] 9.50[/FONT]
[FONT=Verdana, Arial, Helvetica, sans-serif]Fidelity® Select Biotechnology Portfolio[/FONT][FONT=Verdana, Arial, Helvetica, sans-serif] 4.78[/FONT]
[FONT=Verdana, Arial, Helvetica, sans-serif]Fidelity® Select Medical Delivery Port[/FONT][FONT=Verdana, Arial, Helvetica, sans-serif] 4.74[/FONT]
[FONT=Verdana, Arial, Helvetica, sans-serif]Fidelity® Select Utilities Portfolio[/FONT][FONT=Verdana, Arial, Helvetica, sans-serif] 4.77[/FONT]
[FONT=Verdana, Arial, Helvetica, sans-serif]Fidelity® Nordic[/FONT][FONT=Verdana, Arial, Helvetica, sans-serif] 9.50[/FONT]
[FONT=Verdana, Arial, Helvetica, sans-serif]Fidelity® Latin America[/FONT][FONT=Verdana, Arial, Helvetica, sans-serif] 9.54[/FONT]
[FONT=Verdana, Arial, Helvetica, sans-serif]Fidelity Spartan® Extended Mkt Index Inv[/FONT][FONT=Verdana, Arial, Helvetica, sans-serif] 9.52[/FONT]
[FONT=Verdana, Arial, Helvetica, sans-serif]Matthews Asia Growth Investor[/FONT][FONT=Verdana, Arial, Helvetica, sans-serif] 9.46[/FONT]
[FONT=Verdana, Arial, Helvetica, sans-serif]Matthews India Investor[/FONT][FONT=Verdana, Arial, Helvetica, sans-serif] 9.53[/FONT]
Total: 88% stock, 12% real estate
Country Breakdown
United States – 33%
Latin America – 9.5%
South Korea – 9.5%
India – 9.5%
Sweden/Denmark/Finland 9.0%
Japan – 6.4%
Other Europe – 5.5%
Other Asia – 4.3%
China 4.2%
Hong Kong 2.9%
Taiwan 1.2%
Other or combination of above – 5%
I calculated 3 year correlation coefficients of all mutual funds against each other, took the average of all of them (not sure if this is the right way to do it) and got a mean correlation of 0.59. There is a lot of diversification, both geographically and currency.
There are no bonds, which is because I have a long time horizon, the long-term performance of stocks is higher than bonds, and I am willing to experience temporary drawdowns. If interest rates rise I don't think the returns of bonds the last few years will persist. I don't know much about bonds and am open to arguments for including them and would purchase some if I thought their long-term performance would exceed stocks. If I was to buy bonds I would be interested in corporate and perhaps emerging market bonds.
Thanks for any input!