Strategy Beginner: Steps to a Suitable Portfolio

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1.
A successful portfolio _______.
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Should contain investments that work together to help you reach your goals. A portfolio can be made up of "good" investments, but they may not work well together.
2.
A 40-year-old should put how much money in stocks?
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The amount is a matter of personal preference, based on the investors goal for the money. The rule of thumb would suggest that 40-year-olds put 40% of their assets in cash/bonds and the remaining 60% in stocks. But those percentages may be inappropriate, depending on an individual investors goal. Asset allocation is a matter of personal preference.
3.
When its time to rebalance your portfolio, which is the most likely to happen?
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Youll probably have to increase your cash/bond position and decrease your stock position. Most of the time, stocks outperform cash and bonds. As a result, youll usually have to cut back your stock position when you rebalance.
4.
To determine whether your existing portfolio fits your investing blueprint, you should answer questions such as _______.
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All of the above. These are just some of the questions you should ask about your portfolio to make sure it fits your blueprint.
5.
When figuring out whether your current portfolio matches your pattern, which question should you NOT ask?
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How did my individual investments do last week? When examining your current portfolio, dont worry about the short-term performance of individual investments. Instead, focus on how these investments are--or arent--working together. Ask which investments are your core investments, and whether you have a lot of overlap among your investments.