Portfolio: 8 Funds

AS YOUR WEALTH grows, you might venture beyond a one-fund or three-fund portfolio and get a little more sophisticated. Here’s what an eight-fund balanced portfolio might look like:

  • U.S. large-cap stocks: 20%
  • U.S. small-cap stocks: 6%
  • Real estate investment trusts: 3%
  • Developed foreign stock markets: 22%
  • Emerging stock markets: 7%
  • Gold stocks: 2%
  • Short-term corporate bonds: 25%
  • Inflation-indexed Treasury bonds: 15%

What do these extra funds get you? You gain greater control over your diversification, with dedicated exposure to, say, emerging markets and U.S. small-cap (or “capitalization”) stocks. You add alternative investments through real estate investment trusts and gold stocks.

You also improve the diversification of your bond allocation with the addition of inflation-indexed Treasury bonds, an intriguing diversifier thanks to the guaranteed inflation protection, though less intriguing at today’s modest yields. On top of all this, you introduce the chance to goose returns by rebalancing within asset classes.

Next: Portfolio: 12 Funds

Previous: Portfolio: 3 Funds

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