Past Performance is No Guarantee of Future Results... A lot more smarter men then me sit at NBC all day discussing whether correlations between a wide variety of assets will continue or breakdown. I'd like to be prepared for them to remain in place or not. Anyway, thanks for the morningstar advice and I will certainly look into what bond funds have to offer these days.
This allocation is not efficient. You'd need Macroaxis and more suitable investments to do a real portfolio. Every investment in this is too aggressive, and that's coming from an IA/CTA.
Wait til April, then short XLF. Cover half at 10%, then one quarter at 15% rest at 20% close by October, whatever comes first. Then reverse long but only with the gains all the way til March. Keep cash in CD until it's time to short. Joe
The goal should be Capital preservation along with tax avoidance. I would look at guaranteed tax free instruments, Muni-Bonds.
All capital apreciation is tax free here, interests get taxed 20%, stock dividends get taxed 25% national, 50% international.
I believe seniors (and people in general) who got hit hardest these last few years have been hit because: - Too much exposure to individual stocks or companies. I'm sure everyone knows someone who had 90% of their money in say C bonds or stock. - Too little diversification in regions, currencies, sectors. People used to think owning Meryl, BAC and JPM was being diversified. - Little to no exposure to any upside making any rebound in risk assets of no influence to them. It's classic mom and pop to sell after a 50% loss and see the rebound go past you. What am I missing...
I have given it a couple of weeks and have come to the decision that I will try and pursue a 25% cash 25% gold 25% stocks 25% bonds alocation for my mother and grandmother's savings combined. I believe this is a smart way to limit risk, with upside potential in place while drops in the one could be countered by a rise in the other. The cash amount will probably be higher then 25% since there will also be some of the money used for day to day expenses. They already own all 4 of these assets, so adjustments will be smaller then just putting in all the money in at one time. I will take the time to come to think about the allocation of the individual categories. For sure index investing will be the largest chunk of the stock part, since that as well lowers the risk.