[jively]

I generally use the same allocation for all clients. The stock allocation is divided into these asset classes:

20% US large cap
20% US large cap value
10% US small cap
10% US small cap value
10% US real estate stocks
20% International stocks
10% Emerging markets stocks

The fixed income portfolio is generally divided as:

50% short-term bonds (high quality)
50% intermediate-term bonds (high quality)

So, someone that chose portfolio C, 80% stock, 20% fixed would have this allocation:

16% US large cap
16% US large cap value
8% US small cap
8% US small cap value
8% US real estate stocks
16% International stocks
8% Emerging markets stocks
10% short-term bonds (high quality)
10% intermediate-term bonds (high quality)

This is based on academic research that show that small stocks and value stocks have higher returns than large stocks and growth stocks, over long investing periods. Taking risk with the fixed income is not properly rewarded. The purpose of the fixed income is solely to reduce the risk in the entire portfolio.

For value funds, the deepest value (if diversified) is the best. For small cap funds, the smallest cap (if diversified) is the best.

For the allocation to International, if there are choices for intl small or intl value, I would definitely use those; break up the 20% intl maybe as 10% intl, 5% intl value, 5% intl small. If available, Emerging markets can also be tilted to small and value.

So, in terms of the "international" question, I like having 30% exposure to international and 70% to the US. Anything in the ballpark will be fine; if you want a little more or less exposure it shouldn't make that much difference.

You can have a successful investing experience with open-ended mutual funds or with ETFs. Since you are starting with $100K and because you are adding $5K per month, I'd suggest using open-end funds held directly with Vanguard. You get low expense ratios, no transaction fees, and no minimum balance fees.

I will get to the specific investments in the next post.

-Tom