Tuesday, May 27, 2008

Mixing Asset Classes can help to moderate risk

Investment Profiles



Domestic StockForeign StockBondsShort-TermHighest 12-mo returnLowest 12-mo returnHistorical Average Annual Return
Conservative20%
-
50 %
30 %
31.06 %
-17.67 %6.16 %
Balanced45%
5%
40 %
10 %
76.57 %
-40.64 %
8.18 %
Growth60%
10%
25 %
5 %
109.55 %
-52.92 %
9.23 %
Aggressive
Growth
70%
15%
15 %
-
136.07 %
-60.78 %
9.94 %


Source: Fidelity's Stages magazine

For students: 529 college savings plans
- Any earnings are accumulated on a tax-deferred basis
- As long as the money is used for qualified higher education expenses, you don't pay federal income tax when you withdraw the money.
- Better than a savings account, Coverdell Education Savings Account (ESA), UTMA (uniform transfers to minors account) and UGMA (uniform gift to minors account) in most cases.
- You can go to college in any state that offers the plan.
- Up to $300,000 can be contributed (as opposed to just $2,000 for a Coverdell ESA).

Recommended sources:
http://www.savingforcollege.com
Joseph Hurley's books

No comments: