how to build best money asset allocation?

Answer 1

Your asset allocation depends on many things including how long you are investing for and your risk tolerance. Take the quiz at Vanguard to determine what percent to put in stocks vs bonds. The target retirement funds at Vanguard are good consideration. IFA has another asset allocation quiz that you might also like. It applies mainly to their funds, but many Vanguard funds can be substituted for their funds.

I like index funds. Because of their broad diversification, you are less likely to have a dramatic drop in value. They also have the lowest expenses. For money put in stocks, I would suggest putting ~70-80% of your money in the Vanguard Total Stock Market Index Fund. and ~20-30% in a foreign stock index fund. However, there are many different opinions out there on what the best mutual funds are.

Real estate is another way to diversify. Buying a house instead of renting will save you a lot of money in the long run. You don't have to pay rent and you build equity in your house instead. Buying rental property can also be a good investment. However, being a landlord can be hard work, and many people are not good at it. If you don't know how to handle deadbeat renters, you can have trouble.

Answer 2

I agree with TLCjo. Balance your portfolio regularly. Even when one basket yield higher than another, you need to move money away from the higher-yielding basket to balance your portfolio.

For asset allocation you can visit the 2 websites I'm listing below.

If you're in your 20's I'd suggest you put 70% in stocks and 30% in bonds, and rely less on stocks as you age. It depends on what you need though.

Answer 3

Buy into a target fund that is based on your retirement year. The fund automatically diversifies and rebalances your investment automatically as you move closer and closer to the retirement age. They invest in corp bonds, gov't bonds, large, mid, and small domestic stocks, international stocks, etc.

Right now, my target fund is invested approximately in 25% bonds, 15% international stocks, and the other 60% in the total domestic stock market.

Answer 4

Diversify, and rebalance your portfolio regularly.
You should have a financial advisor assist you rather than try to manage it yourself. Also, a few brokers work on commission so the better you account performs the more money they make so they will be looking out for your best interest. Either way make sure they are qualified.
Good luck.