Asset Allocation Question - Tilted Forum Project Discussion Community

iccky · 05-06-2006, 10:30 PM

This is actually being asked on behalf of my girlfriend (sadly I have few assets to allocate) who happens to have 10 grand lying around in an ING Bank Account and no idea what to do with it. She's a grad student who will be in school (and has pretty much guaranteed funding) for the next four years. She's also fairly risk averse, and will stay up all night if her money is in Haitian penny stocks.

So what do you all think is the proper asset allocation for her between stocks, bonds, REITs, cash, whatever?

Not knowing much, I suggested she get at least some of the money out of a bank account and into the market. I'm a fan of index funds, which are also good for the risk adverse, so I suggested she drop 3 or 4 grand into a Schwab S&P 500 indexer (low minimum, fairly lost cost ratio). Beyond that, however, I'm pretty much out of ideas.

Any investment gurus out there?

eribrav · 05-07-2006, 03:30 AM

For a risk averse individual, an index fund sounds fine. Also consider a Russell 2000 or Wilshire Total Market fund.

I also like the short end of the yield curve right here. You can get that through a high yielding online savings account, or open a Treasury Direct account, and buy 3 or 6 month Treasuries and keep roling them over. Since she probably isn't earning that much, the tax advantages of Treasuries may not really mean anything, and it might just be easier to keep it in savings.

I also think international markets are a better opportunity that the US right now. Maybe take 10 or 20% of the money and get into an international fund.

nezmot · 05-07-2006, 04:20 AM

Property can be great - I don't know what kind of accommodation is over there at her school, but a property housing 4 students could be cheap to buy, and pay for itself in rent for a few years. Then with luck, the property will have risen in value (due to the general trend in house prices) and she can get her 10k+interest back - or, keep renting it out to students, and turn it into a longer-term investment.

ibis · 05-15-2006, 07:57 PM

I hate making reccomendations... but take a look into gold right now.

Lady Sage · 05-22-2006, 04:04 PM

Diversify! Keep enough in liquid funds such as CD's in case of emergency. After that wherever she banks should have a financial consultant who can go oer her goals and give her a list of options for her to mull over and research at her leisure. Also if she chooses to put all of it into CD's stagger them. One due in 4 months, one due in 6, one in 9, one in 12. That way if anything unfotunate happens she always has money coming due. Hope this helps

macmanmike6100 · 06-03-2006, 02:38 AM

These forums are great for investment advice:

http://socialize.morningstar.com/New...mId=F100000026
http://www.diehards.org/

Or in general, www.morningstar.com

05-06-2006, 10:30 PM	#1 (permalink)
iccky Psycho Location: Princeton, NJ	Asset Allocation Question This is actually being asked on behalf of my girlfriend (sadly I have few assets to allocate) who happens to have 10 grand lying around in an ING Bank Account and no idea what to do with it. She's a grad student who will be in school (and has pretty much guaranteed funding) for the next four years. She's also fairly risk averse, and will stay up all night if her money is in Haitian penny stocks. So what do you all think is the proper asset allocation for her between stocks, bonds, REITs, cash, whatever? Not knowing much, I suggested she get at least some of the money out of a bank account and into the market. I'm a fan of index funds, which are also good for the risk adverse, so I suggested she drop 3 or 4 grand into a Schwab S&P 500 indexer (low minimum, fairly lost cost ratio). Beyond that, however, I'm pretty much out of ideas. Any investment gurus out there?

05-07-2006, 03:30 AM	#2 (permalink)
eribrav Junkie Location: upstate NY	For a risk averse individual, an index fund sounds fine. Also consider a Russell 2000 or Wilshire Total Market fund. I also like the short end of the yield curve right here. You can get that through a high yielding online savings account, or open a Treasury Direct account, and buy 3 or 6 month Treasuries and keep roling them over. Since she probably isn't earning that much, the tax advantages of Treasuries may not really mean anything, and it might just be easier to keep it in savings. I also think international markets are a better opportunity that the US right now. Maybe take 10 or 20% of the money and get into an international fund.

05-07-2006, 04:20 AM	#3 (permalink)
nezmot Registered User	Property can be great - I don't know what kind of accommodation is over there at her school, but a property housing 4 students could be cheap to buy, and pay for itself in rent for a few years. Then with luck, the property will have risen in value (due to the general trend in house prices) and she can get her 10k+interest back - or, keep renting it out to students, and turn it into a longer-term investment.

05-15-2006, 07:57 PM	#4 (permalink)
ibis PIKE!	I hate making reccomendations... but take a look into gold right now.

05-22-2006, 04:04 PM	#5 (permalink)
Lady Sage Mistress of Mayhem Location: Canton, Ohio	Diversify! Keep enough in liquid funds such as CD's in case of emergency. After that wherever she banks should have a financial consultant who can go oer her goals and give her a list of options for her to mull over and research at her leisure. Also if she chooses to put all of it into CD's stagger them. One due in 4 months, one due in 6, one in 9, one in 12. That way if anything unfotunate happens she always has money coming due. Hope this helps

06-03-2006, 02:38 AM	#6 (permalink)
macmanmike6100 High Honorary Junkie Location: Tri-state.	These forums are great for investment advice: http://socialize.morningstar.com/New...mId=F100000026 http://www.diehards.org/ Or in general, www.morningstar.com