In looking at the stock component of a long term portfolio what do you think are some good percentage ratios to allocate to Australian and international stocks (using funds as a vehicle)?
You can read many investment books written by Americans that advocate devoting figures like 80/20 or 70/30 of one's portfolio to U.S/non-U.S. stock.
But how do such recommendations translate for Australian investors? The market sizes are incomparable. Our much smaller market would seem to suggest Australian investors need a higher percentage of foreign stocks than these American recommendations, figures like 60/40, 50/50, or 40/60. One could even argue 20/80 or 10/90.
I'm speaking about these allocations not as a means to pick markets but as a way to diversify and reduce risk. You never know what could happen. I mean if you were Japanese and investing in 1989 you'd feel pretty happy investing 100% in your own country, but of course an allocation of 50/50 would have reduced a lot of the pain that was to come.
Australia has a bright economic outlook at present but without an overseas component in your portfolio it's a big bet on a very small market, right?
So if you agree that some foreign component is required then what do you suggest that figure should be?
You can read many investment books written by Americans that advocate devoting figures like 80/20 or 70/30 of one's portfolio to U.S/non-U.S. stock.
But how do such recommendations translate for Australian investors? The market sizes are incomparable. Our much smaller market would seem to suggest Australian investors need a higher percentage of foreign stocks than these American recommendations, figures like 60/40, 50/50, or 40/60. One could even argue 20/80 or 10/90.
I'm speaking about these allocations not as a means to pick markets but as a way to diversify and reduce risk. You never know what could happen. I mean if you were Japanese and investing in 1989 you'd feel pretty happy investing 100% in your own country, but of course an allocation of 50/50 would have reduced a lot of the pain that was to come.
Australia has a bright economic outlook at present but without an overseas component in your portfolio it's a big bet on a very small market, right?
So if you agree that some foreign component is required then what do you suggest that figure should be?
