Wednesday, April 05, 2006
Asset Reallocation, Version 1.0
For those that have been reading my blog, you already know I'm planning a fairly drastic reallocation of my assets. So far I've come down to the conclusion that I want my asset allocation to look something like this: 30% Cash 20% Bonds 50% Stocks This would be the percentages of my retirement and non-retirement funds combined. First, I'm planning on shifting my 401k funds to a Large Cap fund, International Stock Fund, and various bonds (TIPS and stable value). Currently, my 401k looks like this: Retirement 401k ($69.9K) Money Market - $13.9K Bonds - $30.9K Large Cap (Stock Market Index) - $17.8K International (Stock Market Index) - $7.3K My target 401k reallocation: Large Cap (Stock Market Index) - $40K Int'l Stock - $15K Bonds - $14K Roth IRA: Brokerage - Stocks 100% - $6.9K Then I want to shift my non-retirement investments by moving cash to my brokerage accounts and investing in some stocks. My current non-retirement allocation looks like this: Brokerage - Stocks 100% - $15.7K ESPP - Stocks 100% - $7.8K I would like to increase it to: Brokerage - $30k ESPP - remains, increases regularly through employee purchase program Considering everything put together, this would leave my asset allocation looking like this: 42% Cash 7% Bonds 51% Stocks My considerations for stock purchases are: JNJ - I like their current price, considering their history. They are also near their 52wk low, has a decent dividend, and the medical industry is a pretty stable industry. I thought about KO, and I like Coke's position, but their recent ad campaign lacks the punch I'd like to see. While Pepsi is smashing Coke cans, Coke is saying bye to root beer. Which by the way has made me avoid Pepsi...Smashing Coke cans are just not cool. Now Pepsi's commercial with the bouncing delivery truck with the awesome radio, that was funny. I'd like to see Coke start a more aggressive campaign and innovate--not just create new variations of the Coke flavor and boring ads although Vault is a step in the right direction. Other than JNJ, I just don't know...Maybe I'll just invest everything in JNJ :/ Keep in mind, I'm not that well versed in the stock market, so sorry if I use the wrong terminology... I don't want to get into the stocks that are in the following industries: Insurance - too many weather issues recently, plus war terrorism Home related - Housing bubble Financial - Foreclosures and other financing issues Anyway, I'm going to think about this more...Is anyone as confused as I am?