MoneyTalk

 

Ask A Foolish Question – What Does A Typical Portfolio Look Like?

27 July 2012
In this week’s episode:

Sonia Rehill rifles through her mail box for more of your investing questions. Sonia is joined by David Kuo who describes what a normal portfolio should look like. They also look at how to find a good fund and the concepts of adjusted profit and organic revenues. In this episode they also explain how to find shares that offer growth and income, the investing theory of "yield on cost" and some common misconceptions about Self-Select ISAs. A transcript of this podcast is also available.

 

If there is a question about investing that you would like answered, please email Sonia at foolishquestions@fool.co.uk. If you would like to listen to previous episodes of Ask A Foolish Question, you can find them here.

 

Want to learn more about shares, but not sure where to start? Download our latest guide -- "What Every New Investor Needs To Know" -- it's free, courtesy of David Kuo. The Motley Fool is helping Britain invest. Better.

Sonia Rehill and David Kuo
Sonia Rehill and David Kuo

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Comments

The opinions expressed here are those of the individual writers and are not representative of The Motley Fool. If you spot any comments that are unsuitable hit the flag to alert our moderators.

goodlifer 30 Jul 2012 , 9:47pm

Your "Rule of 100" makes no sense at all to income investors like me.

If the market goes down we don't want "time for the market to recover," we're just grateful for the chance to get better value for the dividends we reinvest, and we just hope against hope the market'll go down even further

I'm a partially retired octogenarian, and we're about 99.5% invested in shares (our portfolios) and in property (our home.)

The odd 0.5% is in Premium Bonds: not so much as an investment - though we've had our fair share of small wins - as an easily accessible source of readies to cope with the inevitable little emergencies that crop up from time to time.

It's easy to forget that, thanks to inflation, cash is only a safe bet for the very short run.
I don't care what Sir Mervyn says, it's on the cards - what with QE and massive government debt - we'll see plenty more inflation quite shortly.

So I wouldn't touch bonds with a bargepole, and keep no more cash than we need to be comfortable with.

Of course I could have got every thing all wrong?
Wouldn't be the first time.

TMFDragon 31 Jul 2012 , 4:05pm

Hi goodlifer

The Rule of 100 is a general rule of thumb for allocating money within a normal portfolio, though I can also see weaknesses in the rule.

The Rule is based on the principle that the older you are the less time you have for the market to recover. Let's say you are 60 years of age with only a few years to go before you retire. The last thing you would want is for your investment portfolio to lose 20% or 30% of its value should the market fall significantly.

That said, if you are already retired I can see how a portfolio of high-yielding shares could be a good source of income especially if you have other ways to fund your retirement.

What it boils down to is your tolerance to risk.

Foolish regards

David

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MoneyTalk is a podcast from The Motley Fool (UK). Hosted by David Kuo, it’s a lively roundtable discussion where Fool writers and guests from the world of money thrash out the financial issues of the day.

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David Kuo is The Motley Fool’s media personality. He can be heard on BBC London’s (94.9FM) Breakfast Show where he arouses listeners every weekday morning with his unique brand of financial news. He is also a regular commentator on national news programmes including CNBC, BBC News, and Sky News.

David stumbled into the world of broadcasting at the turn of the Millennium when he was invited to comment on the stock market crash. He says, “I think I stunned Londoners speechless when I said the good thing about the crash is that shares are now more affordable for people who want to invest in the stock market!”

His attitude to investing has never wavered, as he always sees downturns in the market as a buying opportunity for long-term investors.