build investment portfolio?

Question

do most people build their own retirement portfolio for mutual funds or just pick say... Retirement 2030 and go with it? is it smarter to go with mostly stocks or bonds if im around 25 and have a long way to go till 60. thanks

Answer 1

The rule is, take the number 100, minus your age, and that's the percent of stocks you should have. So, at 25 you'd have 75% stocks, but at 50 you'd have 50%. A lot of people don't build retirement portfolios at all, or just little ones and then they're stuck when they're 50 and realize they haven't put enough money aside. You can take some time to study it, because you can probably do better than the 2030 idea, but if you don't want to study, then 2030 is pretty good. However, if you're 25, then 2030 won't cut it, because you won't retire until 2042 or so. I'd study up on it and learn about it. Congrats for getting in early, that's the best way to beat the market, just start early and save and invest every month.

Answer 2

At your age you should own far more stocks than bonds. The exact percentage depends on factors such as your tolerance for risk (How upset do you get when your investments lose money?) and whether you have any short term goals that require a more conservative investment strategy.

A target 2030 would probably well, but remember it's not customized at all for your specific needs. If you have an extremely low risk tolerance, the manager of the target fund won't adjust its stock/bond percentage to satisfy you. Such target funds are definitely a "one size fits all" solution.

Answer 3

A great way to start is with a simple, diversified mutual fund. Usually Mutual Fund Families will send you alot of information with your quarterly statement, giving you an opportunity not only to learn about what you own, but also some of the other products they offer. If you are just start out I would say 2 things help alot- 1. start simple- explained below 2. Try to use the auto invest-- which moves some money from your checking over to your investment. you can usually do this for as little as $50 and it makes a HUGE Difference over time, especially if you try to increase it as you make more money and get comfortable. so for keeping it simple- try starting off with one of the following "type" of funds which has a good track record of being stable, and also making money- a. Try a simple "blue chip" or "Large Cap Value" fund- these are the bigger companies out there that are stable and pay nice dividends b. Try a "Balanced Fund" which is usually 60-70% stock and 30-40% bonds it is a bit more moderate than all stocks. c. Try an "Asset Allocation Fund"- this is probably my favorite as the fund will sometimes have some in US stocks, some in international, some in bonds, some in small cap stocks, etc- and you can usually choose them by your own risk tolerance. I hope this helps, i think you will be happy no matter which way to start, but the important thing is just to start and accumulate assets, you can always adjust the investments later on as you learn more. Some people are happy using the above mentioned ideas over thier lifetime. have fun!

Answer 4

At your age definitely stocks. I'd pile the cash into an S&P 500 index fund, perhaps some international funds, and perhaps a bit into something with solid growth prospects in the near future (say biotech or nanotech.)