Determining allocation
 There's
no single asset allocation that's right for every person
or situation, and no allocation model that's ideally suited
for every phase of your life. Your age, your financial
goals (and how long you have to meet them), your risk tolerance,
your current financial wealth, and your "human capital" will
all play a role in helping you determine your asset allocation.
Your current financial wealth is what you currently own — savings
accounts, real estate, hard assets, etc. Your human capital
is defined as the present value of your future wages dedicated
to retirement. When developing an asset allocation, you
want to consider both of these to quantify your total wealth. |
Professor
Roger Ibbotson, Yale University, chairman and founder
of Ibbotson Associates 