Jonathan’s Story: Portfolio

I HAVE AROUND 60% of my portfolio in stocks, with the balance in bonds and other interest-generating investments. This seems like a reasonable amount of risk for a semi-retired 57-year-old to take, though I would likely boost the stocks to 70% and perhaps more if we saw a large market decline.

The bulk of my bond portfolio is split between short-term corporate bond funds and inflation-indexed bond funds. I suspect interest rates will head higher from today’s modest levels and, as a rule, I would rather play it safe with bonds and take risk with my stocks. In calculating my allocation to bonds, I also include the private mortgage I wrote for my daughter. You can learn more about that in the chapter devoted to borrowing.

What about stocks? I have everything in index funds, with that money divided 50-50 between U.S. and foreign stocks. The U.S. portion is split evenly between a total stock market index fund, which gives me broad market exposure, and index funds that focus on large-company and small-company value stocks. In addition, I own an index fund that buys U.S. real estate stocks.

Meanwhile, for foreign exposure, I own index funds focused on developed foreign markets, international value stocks, international small-company stocks and emerging markets. I also have a position in a fund that owns foreign REITs.

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