Tuesday, December 19, 2006
Simple Formula for Asset Allocation
Once decided to invest and opened an brokerage account, the next question would be how to allocation assets. It depends on individual styles and tolerance. One simple formula would be divide investment into equity and fixed income. Stock would be (120-age)%, and the rest in fixed income.
Stocks
Large Cap, Mid Cap, Small Cap, Internation, Specialty. Style would be value Vs. Growth. My favorite is Mid Cap Value, whith exposure to both Large, Small and International.
Fixed Income
CDs, US Savings Bond and Bond Fund. Unlike long-term capital gain and stock dividend that are taxed at 15% or lower, fixed income is taxed at the marginal tax rate, easily runs above 25%.
Stocks
Large Cap, Mid Cap, Small Cap, Internation, Specialty. Style would be value Vs. Growth. My favorite is Mid Cap Value, whith exposure to both Large, Small and International.
Fixed Income
CDs, US Savings Bond and Bond Fund. Unlike long-term capital gain and stock dividend that are taxed at 15% or lower, fixed income is taxed at the marginal tax rate, easily runs above 25%.
# posted by SIMPLE FINANCE @ 10:19 PM 
