More Commentary on Diversification

English: Phillippine stock market board (Photo credit: Wikipedia)Today I received an email from Fidelity, the custodian of my 401(k) plan.  The timing couldn't be better after the last two days of stock market losses.

This is what it said:

"Based on a review of your workplace savings plan, it appears that your current investment mix may not be appropriate for your age. As your life and the financial markets change, your investment mix needs to keep pace—and we can help you find ways to make that happen."

This is my current 401(k) portfolio allocation:


Short Term - 42%Domestic Stock - 25%Foreign Stock - 23%Bonds 9% Other 1%

With all the market volatility now, I'm pretty happy with this mix.  I'm not confident in the bond or stock markets at this time.  If anything, growth looks better overseas even if there's greater volatility so I split the stock exposure 50/50.  I also chose to be heavily in cash.  I'm not making a lot of money, but I haven't lost a lot either in the last few days.  Even if the US stock market were to suffer a serious correction and half the value were erased, I would only lose 12.5% of the value of my portfolio.  I can live with that.  And thanks, Fidelity, my asset allocation is just fine.

For more ideas on protecting and building your wealth, please check out my new book Building a Financial Fortress.

For more on Diversification, please read my previous posts:

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