It may be a cliche, but it’s TRUE. In the world of investing, you should never put all your money in just one investment tool. I believe the technical term for this is “Diversify”.
Normally, it depends on your risk appetite — the younger you are, the more aggressive you position your portfolio. Your basket should reflect your short and long term goals.
Prior to the Global downturn, here’s how my Basket looked like:
20% – Cash (Peso)
80% – Stocks and Mutual Funds
The Peso was appreciating so fast, that I decided to liquidate most of my Dollars. Also, when the market was in a bull run, you just can’t resist to get into the bandwagon and ride the upswing.
Then, the US Credit Crunch and Housing Slump — which gave me a flash of realization to re-think my portfolio.
Now, here’s how my Basket looks like:
40% – Cash (Peso and mostly Dollar)
35% – Fixed Income
25% – Stocks and Mutual Funds
My Fixed Income comfortable earns 12% p.a., so it serves as my buffer during highly volatile days. The Peso is getting weaker due to Inflation, already lost 9% to the Dollar. Therefore, I’m hedging against the Peso by getting as much Dollars as I can. In a Bear Market, CASH is KING. I’m keeping myself as liquid as possible to re-enter the stock market when the right time comes. Last and definitely the least, though beaten and blue, I’m still keeping my stocks and mutual funds position for my long term goals — I hate to see everything in RED, but what the heck.
Posted by artgamolo 
Posted by artgamolo 
