Asset Allocation For Dummies®

Chapter 8. Creating Your Allocation Plan

In This Chapter

• Picking your asset classes

• Creating your own asset mix

• Taking a look at some sample allocations

• Setting up an allocation review schedule

In this chapter, we show you how to create your own asset allocation plan. This is where the magic happens!

We kick off the chapter with a quick review of the detailed discussion of asset classes and subclasses found in Chapter 3, so that you can be familiar with the types of assets you'll want to include in your allocation plan. Then we move on to establishing your own specific mix of these assets. In doing so, you'll want to keep your eye on the long term. Figuring out the right allocation percentages is a real science, and we show you how the pros do it. Then we talk about how you can do it on your own.

This chapter also contains some sample asset allocations, sharing some examples and guidelines across a range of investment strategies, from conservative to aggressive. And we walk you through a detailed portfolio, complete with asset classes and subclasses, that we develop for a fictional couple, John and Jane Doe.

Finally, even though your asset allocation decisions should be made for the long term, we discuss when you should do periodic reviews.

Tip

Before you dive into the important task of setting up your allocation plan, we suggest that you take a spin through Chapter 3 if you need to bone up on the various types of asset classes and subclasses that you can incorporate in your plan. It also ...