Five Asset Allocation Examples

1. Simple Asset Allocation Example (Stocks/Bonds):

 

Asset	Allocation Percentage
Global Equities	75 %
U.S. Stock Market	55 %
International Stocks	20 %
Global Fixed Income	25%
U.S. Bonds	20 %
International Bonds	5 %

 

2. More Detailed Asset Allocation Example (Stocks/Bonds):

 

 

Asset	Allocation Percentage
U.S. Stocks*	60 %
S&P 500 (Large Cap)	40%
Mid-Cap	10%
Small Cap	10%
International Stocks	20 %
Developed Market Stocks	13%
Emerging Market Stocks	7%
Fixed Income	20%
U.S. Bonds	12%
International Bonds	5%
High-Yield (Junk) Bonds	3%

*This example is overweight mid-cap and small-cap, and underweight S&P 500, since the S&P 500 makes up approximately 80% of the U.S. total stock market capitalization.

3. Example Adding Gold/Commodities:

Asset	Allocation Percentage
U.S. Stocks**	60 %
S&P 500 (Large Cap)	47%
Mid-Cap	9%
Small Cap	4%
International Stocks	18 %
Developed Market Stocks	12%
Emerging Market Stocks	6%
Fixed Income	15%
U.S. Bonds	10 %
International Bonds	3%
High-Yield (Junk) Bonds	2%
Gold/Commodities	7%

**This allocation approach for U.S. stocks is closer to tracking the total U.S. stock market index than the second example above.  This approach allows for rebalancing between large, mid-, and small-cap stocks, but one could pursue a similar approach by purchasing a total U.S. stock market index or ETF, if there is no desire or need to rebalance based on U.S. market cap size.

4. Example Adding Real Estate, through Real Estate Investment Trusts (REIT) ETFs or Index Funds:

Asset	Allocation Percentage
U.S. Stocks	60 %
S&P 500 (Large Cap)	40%
Mid-Cap	10%
Small Cap	10%
International Stocks	14 %
Developed Market Stocks	8%
Emerging Market Stocks	6%
Fixed Income	12%
U.S. Bonds	7%
International Bonds	3%
High-Yield (Junk) Bonds	2%
Gold/Commodities	7%
Real Estate	7%
U.S. Real Estate (REIT EFT or Index Fund)	5%
International Real Estate	2%

 5. More aggressive asset allocation example: This example increases allocation to equities, including small-cap; emerging market stocks; and high-yield bonds.

Asset	Allocation Percentage
U.S. Stocks	65%
S&P 500 (Large Cap)	40%
Mid-Cap	10%
Small Cap	15%
International Stocks	15%
Developed Market Stocks	5%
Emerging Market Stocks	10%
Fixed Income	10%
U.S. Bonds	3%
International Bonds	2%
High-Yield (Junk) Bonds	5%
Gold/Commodities	4%
Real Estate	6%
U.S. Real Estate (REIT EFT or Index Fund)	4%
International Real Estate	2%

Disclosure: The above examples are overweight U.S. assets based on percentages of the total global markets that U.S. markets represent.  The author is a U.S. citizen and admittedly biased toward U.S. equities, fixed income, and real estate.  While the U.S. stock market has outperformed other international markets historically, every investor should be aware of the potential (likelihood) of home market bias and the potential benefits of diversifying internationally.