Model Portfolios

fool.com/retirement/assetallocation/model-portfolios.aspx

January 21, 2009

Motley Fool Staff

Updated: Nov 10, 2016 at 8:00PM

So how does all this come together in the form of an actual asset allocation? Below are
three model portfolios you can use as a starting point for cooking your own investment
soup, followed by descriptions of the asset classes. (Note: We did not include cash in
these allocations. We're assuming you have the money you need in the next year, as well
as an emergency fund, already sitting safely in a money market account or similar
investment.)

We've used five broad categories that could serve as the foundation of your portfolio. The
categories can be further sliced and diced; in fact, the Model Portfolios we discuss in Rule
Your Retirement feature 12 different asset classes. But these five will set you firmly on the
path to a well-diversified nest egg. We've also thrown in a representative exchange-
traded fund (ETF) for each asset class, so you can get an idea of what kinds of
investments fall under each category, as well as a cheap and easy way to implement this
core portfolio:

Asset
class ETF Conservative Moderate Aggressive

Large-cap SPDR (AMEX: SPY) 20% 30% 40%

U.S. stocks

Small-cap iShares S&P 600 (AMEX: 5% 10% 20%

U.S. stocks IJR)

Foreign iShares MSCI EAFE (AMEX: 5% 10% 20%

stocks EFA)

REITs SPDR DJ Wilshire REIT 10% 10% 5%

(AMEX: RWR)

Bonds iShares Lehman Brothers 60% 40% 15%

Aggregate Bond (AMEX:
AGG)

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An allocation adieu
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