What Percent of My Portfolio Should I Put into Stock Mutual Funds and Bond Mutual Funds?

If you are new to the world of investing, or if you are considering expanding your current investments, you may have noticed that mutual funds seem to be a good and fairly safe option. You may also have noticed that there are a broad range of mutual fund options, including stock based mutual funds, and bond based mutual funds. This may have raised a number of questions in your mind, including what percentage of your portfolio should be put into stock mutual funds, and what percentage should be put into bond mutual funds.

This question is actually quite a bit more complicated than you would first think. In order to get some sort of handle on it, you would first need to sit down and determine your personal tolerance for risk, your time frame for investing, your other types of investments, and your overall goals.

That being said, if you are looking for a quick answer without having to determine the above mentioned criteria, you may want to consider a basic rule of thumb: Start with the number one hundred, and subtract your current age. The result is the percentage of your portfolio that you should have in stock mutual funds, and the remainder is the amount you should have in bond mutual funds. So, if you are a 55 year old person, you should have 45% in stock funds, and 55% in bond funds.

If you are looking for an alternative to the “one hundred” rule of thumb, you may want to look into different fund families for Target Retirement Funds that match up with your expected year of retirement. This will give you at very least a general idea of where to start, and what types of offerings are available.

While these suggestions can give you a good place to begin your search, there are no true rules for determining portfolio allocation. If you are completely new to the world of investing, you may want to consult with a professional financial advisor. He or she will be able to assess your goals and help guide you to the best possible options for your needs. If you are not so new to the investment world, you may want to spend some time online, read through the various prospectuses, and conduct a bit of detailed research. No matter how you choose to proceed, always verify all information before making an investment, and ensure you are aware of all fees and restrictions.

Tags: bond, goals, portfolio, risk, stock, target retirement funds