How Much of a Portfolio Should Be in Stocks or Bonds or Cash?

  By Martin Weisberg
Martin Weisberg

You have just asked the million dollar question. Here’s what we believe:  There is a direct relationship between risk and potential reward.

In 1991, there was a well-known study conducted by a group of investment analysts that reviewed more than 80 of the largest retirement plans. They found that more than 90% of the investment performance was determined by the allocation of the investment portfolios. And less than 8% of the investment performance was determined by the specific security selection and market timing.

This means that the allocation of cash, bonds and stocks is a very important decision. It may be the most important one.

So what is the right allocation for you?

It depends. You need a custom allocation that matches your risk tolerance with your goals. Your allocation must be based on a deep understanding of your goals, financial situation and your core values. This is why choosing the right financial advisor is so critical. Your advisor must understand your goals and risk temperament to work with you to properly construct an investment allocation that meets your needs.

For more insight, listen to Jentner Wealth Management’s weekly podcast by clicking here.

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