Allocation

I will try to answer the question about how much to allocate to stocks, bonds, gold, RE etc.

There is no great answer because every situation can be unique.

Another way to look at this is by studying the numbers. Any long term data I have ever seen shows that, without question, nothing keeps up with stocks. Statistically, its not even close. Over shorter periods of time, anything could lead.

Personally, I believe people should have as much equity exposure as they can handle. I would say that 80%-90% is ideal as a target allocation. Most people can not handle that much equity exposure and very few accounts I manage are even 80-20 let alone 90-10.

An 80-20 account can still be conservative. The composition can structured in such a way as to have very low volatility, very little single stock risk but still capture most of the returns provided by equities. Any stocks bonds combo can be as conservative or aggressive as you want to make it. So 80% equities should not be taken as aggressive, per se.

As for gold, most clients have a little exposure by owning a mining stock. As I have written before this is more for a counter strategy than anything else.

Most clients also have some REIT exposure as well.

There's not much more to say because from here differences in circumstances are really the determining factor.

One reader emailed me to ask about short term bond funds. Apologies, but I don't use any. If someone has a short term need to use the money I would rather they just have the money in cash. If I want to shorten the duration of the fixed income portion of the portfolio I use short dated preferred stocks, individual issues. An issue that matures in two years is not likely to stray very far from its par value the way something maturing in 20 years might.