Insightful Investing
'Making it Easier for People to Make Profitable Investment Choices'
Asset Allocation Model Portfolios
Our asset allocation model
portfolios were generated using risk balancing and simulation modeling.
These portfolios are a simple way for you to have a diversified
investment portfolio that reqiores nothing more than annual
rebalancing. You can achieve even better performance by following our active asset allocation
strategy. Either way, you will have better results than 96% of the
investment choices being offered to you today. The worst offenders are
the Target Dated Mutual Funds offered by major mutual fund companies.
While these funds make adjustments based on your age, they give no
consideration to the risk of the current market environment.
We have developed several model portfolios to help you make better
investment choices for your own investment portfolio. You should choose
the asset allocation that is most suitable for your time horizon (years
until retirement for example) and risk tolerance. The table below shows
the asset allocations for our 401k
Asset Allocation, Retirement Asset
Allocation, Conservative
Asset Allocation, Aggressive
Asset Allocation, and Insightful
Asset Allocation. For comparison purposes, we have included
the stock market (represented by the S&P 500) and a basic 60%
Stocks / 40% Bonds portfolio. Below these allocations you will find the
result of our simulation analysis. The most important conclusion you
can draw from this analysis is that you can achieve significant
investment returns with much less risk by being invested in a
diversified portfolio similar to one of our recommended asset
allocations.
In addition to the ssimulation results you see below, we have included the hypothetical performance results that you could have achieved since we started our newsletter in 2003, and over the last 10 plus years on our Model Investment Portfolio performance page.
| Asset Class | S&P 500 | 60/40 Portfolio | 401k Portfolio | Retirement Portfolio | Conservative Portfolio | Insightful Portfolio | Aggressive Portfolio |
|---|---|---|---|---|---|---|---|
| Cash | 12% | ||||||
| Short Term Bonds | 32% | 10% | 12% | 8% | 4% | ||
| Intermediate Bonds | 8% | 8% | 6% | 5% | |||
| Long Term Bonds | 4% | 4% | 4% | 3% | |||
| TIPS | 10% | 10% | 8% | 6% | |||
| Broad Bonds | 40% | 24% | 8% | 10% | 8% | 6% | |
| High Yield Bonds | 8% | 3% | 4% | 3% | 3% | ||
| Global Bonds | 6% | 8% | 5% | 4% | |||
| Emerging Bonds | 3% | 4% | 3% | 3% | |||
| Debt Securities | 40% | 64% | 64% | 60% | 45% | 34% | |
| Large Cap Equity | 100% | 30% | 6% | 3% | 3% | 6% | 6% |
| Mid Cap Equity | 10% | 7% | 3% | 3% | 6% | 9% | |
| Small Cap Equity | 10% | 7% | 3% | 3% | 6% | 9% | |
| International | 10% | 10% | 3% | 4% | 6% | 8% | |
| Emerging Markets | 4% | 5% | 8% | 10% | |||
| Real Estate (REITS) | 6% | 4% | 4% | 6% | 7% | ||
| Equity Securities | 100% | 60% | 36% | 20% | 22% | 38% | 49% |
| Long/Short Equity | 6% | 8% | 7% | 7% | |||
| Long/Short Futures | 10% | 10% | 10% | 10% | |||
| Hedged Securities | 16% | 18% | 17% | 17% | |||
| Total Portfolio | 100% | 100% | 100% | 100% | 100% | 100% | 100% |
| Asset Class | S&P 500 | 60/40 Portfolio | 401k Portfolio | Retirement Portfolio | Conservative Portfolio | Insightful Portfolio | Aggressive Portfolio |
|---|---|---|---|---|---|---|---|
| 1 Year Time Period | (Values shown below are in percentages) | ||||||
| 5th Percentile | 41.1 | 28.6 | 21.0 | 17.5 | 19.3 | 23.5 | 27.1 |
| Mean Total Return | 10.0 | 8.8 | 7.8 | 7.9 | 8.4 | 9.2 | 9.9 |
| 95th Percentile | (22.1) | (10.7) | (5.0) | (1.4) | (2.1) | (5.0) | (7.3) |
| Probability of Loss | 29.0 | 23.2 | 16.2 | 8.1 | 9.6 | 14.5 | 17.4 |
| Standard Deviation | 19.4 | 11.9 | 7.9 | 5.7 | 6.5 | 8.7 | 10.5 |
| Worst Case | (55.2) | (34.1) | (22.0) | (12.4) | (16.0) | (22.2) | (28.1) |
| 6 Year Time Period (Annualized) | |||||||
| 5th Percentile | 23.7 | 17.6 | 13.7 | 12.4 | 12.7 | 15.4 | 17.5 |
| Mean Total Return | 8.6 | 8.3 | 7.6 | 7.8 | 8.3 | 8.9 | 9.5 |
| 95th Percentile | (7.6) | (0.9) | 1.4 | 3.3 | 4.0 | 2.6 | 1.4 |
| Probability of Loss | 17.5 | 6.7 | 2.1 | 0.2 | 0.1 | 1.1 | 2.9 |
| Standard Deviation | 9.5 | 5.6 | 3.8 | 2.8 | 2.7 | 3.9 | 4.9 |
| Worst Case | (27.4) | (14.1) | (5.8) | (1.7) | (0.7) | (4.3) | (9.8) |
| Expected Portfolio Value | $177,416 | $165,844 | $157,026 | $157,831 | $162,509 | $169,738 | $176,252 |
| 10 Year Time Period (Annualized) | |||||||
| 5th Percentile | 18.9 | 14.5 | 11.8 | 10.8 | 11.7 | 13.4 | 14.9 |
| Mean Total Return | 8.3 | 8.2 | 7.5 | 7.8 | 8.3 | 8.9 | 9.5 |
| 95th Percentile | (2.3) | 2.1 | 3.4 | 4.7 | 4.9 | 4.4 | 3.9 |
| Probability of Loss | 9.8 | 1.6 | 0.1 | 0.0 | 0.0 | 0.1 | 0.2 |
| Standard Deviation | 6.4 | 3.8 | 2.5 | 1.9 | 2.1 | 2.7 | 3.3 |
| Worst Case | (19.8) | (5.4) | (1.1) | 1.0 | 1.4 | (0.5) | (3.8) |
| Expected Portfolio Value | $259,238 | $232,511 | $212,208 | $213,968 | $224,639 | $241,536 | $257,053 |
| Expected Drawdown | (24.9) | (11.2) | (5.0) | (1.7) | (2.3) | (4.9) | (7.3) |
| Worst Case Drawdown | (89.0) | (56.6) | (29.3) | (15.6) | (19.5) | (29.7) | (44.7) |
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