Saturday, March 24, 2007

allocating your investments

I have been checking around the web for asset allocator calculators that anyone can use. This is a tool to help you decide how to diversify (i.e., spread out) your investments. I found a cool one, actually on several sites, that lets you plug in the amount of money you have to invest, how many years until retirement, how much risk you want, etc. What I especially like about this one is that you can easily dial up or down certain assumptions and see how it impacts the "ideal" portfolio.

To use this calculator, just plug in how much total money you have to invest (to keep it simple, I'd put it all in "cash" to start with), then slide the scales on the right to something semi-reasonable for you. Click the "Ideal allocation" button (next to the red help bar), then the look at the pie chart.

Do not be obsessive about what you put in the calculator. Usually the ideal portfolio is not all that sensitive to adjusting assumptions. This makes it easy. Just put something in, then slide the scales around, and look at the results as ballpark figures. This ain't brain surgery.

Be blessed!
RB

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