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Questioner: Sam

Question: Hello and happy New Year to you,

I have a question about my portfolio balance and I was wondering if you could let me know if I have balanced my investments correctly based on my age and numbers of years I have to retire or is it a complete mess.

I am 34 and my wife is 29. My gross income is $130,000/yr. My wife does not work and we have no kids. As of right now I have invested in the following mutual founds and I am not sure if I have invested heavily in one or more sectors than I should.

Last year I made over $200,000 so I was not eligible to contribute for Roth Ira.

Current balance on my 401K from previous job, (2007)
TGVAX $12,000
MEIAX $6,500

For this year (2008), I have chosen the following founds for my 401K which I intent to contribute the max amount
Emerging Markets 50%
International 40%
Large U.S. Equity 10%

Ira accounts:
CGMFX $9,000 (2007&2008)
VFORX $4,200 (2006)
CD $4,200 (2005) maturing in 3 weeks and I not sure where I would like to roll it in. (Any suggestion?)

Starting this year I have also decided to invest $100 a month to each of the following founds which is a regular taxable account

PRASX
PRMSX
PRIDX
PRLAX
PRNEX
PRWCX
PRMTX
TREMX
PRHSX

Would you please help me restructure my account and I would also greatly appreciate if you have any suggestion on a lucrative mutual fund to invest.

Thanks,
Sam

Answer: Sam, thanks so much for your question. I hope I am able to lend you a little clarity. Unfortunately, it is not the purpose of this forum to provide you with asset allocation and/or make recommendations on the funds you have selected.

However, I can tell you this. As you stated in your e-mail question; You are right it is a "mess".

You have accumulated a lot of names and ticker symbols. Unfortunately, you have very little diversification and a lot of duplication. You are extremely heavy on international and emerging markets and then you have sprinkled large cap and sector funds within them.

I would suggest that you review and read up on asset allocation and begin to properly diversify your portfolio based on your risk tolerance. In addition, rebalance that portfolio at least semi-annualy to prevent over allocation in one area. Also because you want to constantly be buying low and selling high.

Also, review and read up on active vs. passive management. Although, I am glad you have selected no-load funds. Sometimes no-load does not mean less expensive. As your portfolio evolves and gets bigger this is an area you want to definitely review.

If you need additional help, find yourself a "Fee Only" advisor in your area whose philosophy is passive. If you lower your risk and cost (the only two things you can control) and invest for the long-term, I guarantee you will always be ahead.

Happy New Year.

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