What's your asset allocation?

 




What's your asset allocation (ratio of stocks to bonds)? Here's an illustration of highest gain and loss by asset allocation. If you are tilted toward stocks, like I am, make sure that you can stomach a 43% loss without selling. Otherwise, you may want to use a target date fund that automatically includes a percentage of bonds that matches your retirement year. Keep in mind that your pension could likely be the equivalent of two million dollars in bonds! For this reason, I tilt towards stocks. This is a personal decision that each investor needs to make. Karl Fisch's book (link below) includes a section on this topic from pages 79-84. I encourage you to read his book before you make your selection.

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