Questions to ask to determine your asset allocation

Claymore Investments, Inc. 15 May, 2010 | 4:29AM
Facebook Twitter LinkedIn

For most investors, a starting point in determining your asset allocation mix and constructing a portfolio using ETFs is to answer the following questions based on your objectives, risk tolerance and market outlook:

  • First, what percentage in Stocks versus Bonds?

  • What percentage in each broad market category: Canada, U.S., international and emerging markets?

  • What percentage in specific sectors? And which are the top sectors I wish to consider?

  • How much of my bond allocation should be in government bonds, corporate bonds and real return bonds?

  • How often will I re-evaluate and rebalance my portfolio?

Further research on each ETF being considered is always required. Remember, you can't -- and shouldn't -- invest in everything. Stick with categories and investments you are comfortable with, that do fit your risk tolerance or you have deemed to have good market conditions and outlook.

While ETFs can help to simplify the construction and management of portfolios, each investor must determine the asset mix which is most appropriate for their own objectives, risk tolerance and market outlook. Given that asset allocation is the largest driver of portfolio performance, this could be the most important part of an investor's future success.

As a starting point, see our example portfolios on our website to give you and idea of asset classes, allocations and strategies for different risk tolerances.

Facebook Twitter LinkedIn

About Author

Claymore Investments, Inc.

Claymore Investments, Inc.  

© Copyright 2024 Morningstar, Inc. All rights reserved.

Terms of Use        Privacy Policy       Disclosures        Accessibility