Over the Thanksgiving weekend, I decided to play around with Morning Star's X-Ray tool. The tool takes your entire portfolio and analyzes the asset allocation by geography, by risk level, by asset class as well as by type (growth vs. value, etc.). Here is what my current asset allocation across my portfolio is (asset type):
- 39% Domestic Stock
- 50% International Stock
- 8% Bonds
Geographically:
- North America 48%
- Latin America 2%
- UK 9%
- Europe Developed 18%
- Europe Emerging 1%
- Africa/Middle East 1%
- Japan 8%
- Australasia 3%
- Asia Developed 5%
- Asia Emerging 4%
Initial thoughts are that I'm surprised how much exposure to Japan I have and how little to Latin America in comparison.
In Defense of Risk
At my current age and time until retirement, I am well-positioned to take on additional risk. Thus, I am targeting a 95/5 stock/bond split and a >50% International allocation in my stocks. I should be able to handle huge downswings (I'm thinking >40% in two years is within the cards at some point in my working career) and not jeopardize my retirement assets.
See my colleague PK's asset allocation here.
How does your allocation compare?
Cheers,
Cameron Daniels
