ITA Wealth Management

In his book, “All About Asset Allocation,” Richard Ferri writes, “There are good asset allocations, but no perfect portfolios.” The GLW, AA-Mosaic, and Mosaic2 portfolios are efforts to set up strong asset allocation portfolios, while not stating they are ideal portfolios. Here are some additional guidelines for investors thinking about portfolio planning or considering making some adjustments in their current portfolio.

• Consider what risk you are capable of handling when developing a portfolio plan.
• Diversify over numerous asset classes rather than concentrating in one or two broad index funds.
• Keep expenses to a minimum. Look for ETFs with low expense ratios.
• Seek out asset classes with low correlation to those you are already holding in your portfolio.
• Tilt the portfolio toward equities vs. bonds.
• Tilt the portfolio toward value vs. growth. Expect to find some advice to the contrary.
• Include asset classes of REITs, International, and Emerging Markets.

Regardless of what percentages you assign to each asset class, take time to lay out a plan that meets your expectations and tolerance for risk. If you are uncertain how to progress, I highly recommend you link to the IFA investment service and take their Risk Capacity Survey to find out your tolerance for risk. Then mirror the portfolio to which you are assigned by reverse engineering through the use of ETFs. You will not be able to duplicate the IFA portfolio, but one can come close.

Lowell Herr

Premium Content available for $6.99 per month. Register now for low cost trial.

Photograph: Rafina Port ferry