investment portfolio en-US Portfolio Ailing? Take a Peek at Asian Markets. <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/portfolio-ailing-take-a-peek-at-asian-markets" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="" alt="Hong Kong" title="Hong Kong" class="imagecache imagecache-250w" width="250" height="166" /></a> </div> </div> </div> <p>Has your portfolio taken a pounding during the last 18 months? It might be time to consider opportunities a little further from home.</p> <p>American investors are accustomed to the Dow, the S&amp;P, and NASDAQ. But what about the <a href="">Shanghai Stock Exchange</a>, the Hong Kong Stock Exchange, or the Shenzhen Stock Exchange? China, after all, is one of the few large-scale economies in the world that is growing. It's poised for sustained and considerable growth given sheer demographics (a population of 1.4 billion) coupled with the continued emergence of a significant middle class. For example, the Chinese new car market is now bigger than the U.S. market, and China also controls 98% of the markets for rare earth minerals. In short, China is the number two economy in the world and will continue to dominate global trading.</p> <p>So if you haven't been paying attention to the Asian stock markets, you could be missing out on a vital tool for making money. But be prepared to drink some coffee and stay up late, because these stock markets operate on a completely different schedule, and you have to be ready to strike &mdash; because if you snooze, you may lose, and lose big.</p> <p>We know that currency markets run 24/7, and that can be a dizzying pursuit. Standard stock exchanges give you a little more room to relax (but not much). Fortunately for Americans interested in investing in Chinese stock markets, the China stock exchanges have fixed hours &mdash; just not the same fixed hours, of course, as the New York Stock Exchange. If you want to be a Shanghai market watcher, be prepared to stay awake late into the night and early morning. The Shanghai Stock Exchange runs from Monday through Friday, with 19 holidays per year. The day starts at 9:15 a.m. (9:15 p.m. in New York) with centralized competitive pricing for just 10 minutes, then bidding goes from 9:30 a.m. to 11:30 a.m. (9:30 p.m. to 11:30 p.m. in New York). You can take a break and sleep until 3:00 a.m., when a second session runs for two hours.</p> <p>But hold on &mdash; it turns out you can't easily invest in any Chinese stock market. Investment directly into Chinese equities is not possible for foreigners, but folks outside the Chinese mainland can invest in Chinese companies listed in the U.S. and in Hong Kong. Language barriers are also significant, and accounting standards are different, so you need to have real research. Fortunately, there are organizations like AERI &mdash; the <a href="">Asian Equity Research Institute</a> &mdash; to help break down the Asian markets, give insight into the banking sector, and help foreigners understand investment opportunities in China and other countries in Asia.</p> <p>For instance, a September 20, 2010, a newsletter from AERI offered investors this important news: &quot;September 16, sources revealed to the China Securities Journal that China Securities Industry Association plans to inspect 5% to 10% of the securities exchange storefronts in each district of local securities industry association organizations during the year, and mainly to attack those decoying to open accounts with low commission, zero commission, and unfair competition, etc. The inspection result may affect the stock brokerages&sbquo; category evaluation, and those that are serious will be suspended with business-related qualifications.&quot;</p> <p>If you're a foreign investor who relies on one of these low-commission, zero-commission securities operations being targeted, you want to know &mdash; now &mdash; so you can secure your investments. Information like this from research firms is a key element to delving into foreign markets. Potential investors should also pay attention to the Hang Seng Index, which is the major index governing the Hong Kong stock market.</p> <p>The barriers to entry can seem daunting to some investors, but the payoffs are potentially enormous.</p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="">Chris Birk</a> of <a href="">Wise Bread</a>, an award-winning personal finance and <a href="">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-1"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="">7 Investments That Usually Soar During the Summer</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="">These 8 Small Cap Value Investments Are on Fire</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="">8 Stocks to Dump Before the New Year</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="">158 Free Investment Classes From Morningstar: Earn Rewards While You Learn</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="">11 Investing Tips You Wish You Could Tell Your Younger Self</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Financial News Investment Asian markets investment portfolio stocks Wed, 10 Nov 2010 13:00:13 +0000 Chris Birk 290887 at Asset Allocation for All Markets <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/asset-allocation-for-all-markets" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src=" allocation for all markets.jpg" alt="different piles" title="different piles" class="imagecache imagecache-250w" width="250" height="188" /></a> </div> </div> </div> <p class="MsoPlainText">Asset Allocation, being the distribution of your investment portfolio across different types of assets (known as “asset classes”), is not meant to be something that changes with the markets. In fact quite the opposite: a properly allocated portfolio is meant to weather both good markets and bad; to allow you to rest assured that your investments will reach your ultimate goals of what you need the money for without actively moving the money around. </p> <p class="MsoPlainText">The effects of proper asset allocation are not to be underestimated; the vast majority of your long-term returns are attributed to asset allocation – not market timing or selecting specific investments, as you might suspect. </p> <p class="MsoPlainText">But achieving the right asset allocation can be like groping around in the dark (and not in a fun kind of way!) if you don’t know where to begin. This article will help you to determine the proper asset allocation for your money. But first, some definitions of the different types of Asset Classes:</p> <p class="MsoPlainText">&nbsp;</p> <h3 class="MsoPlainText"><strong>Cash</strong></h3> <p class="MsoPlainText">Despite its name, this allocation is not a license to hide money under your pillow! Cash investments include <strong>high-interest savings and money market accounts</strong> – ones that won’t make you a ton of money, but that are guaranteed and that will likely keep pace with inflation. </p> <p class="MsoPlainText">&nbsp;</p> <h3 class="MsoPlainText"><strong>Fixed Income</strong></h3> <p class="MsoPlainText">These are mostly interest-bearing investments, and sometimes guaranteed (technically <em>“cash”</em> is a fixed income investment too). A fixed income investment won’t generally shoot the lights out in returns, but chances of investment losses are also capped. Examples are <strong>bonds, term deposits, and even some real estate derivatives</strong>. </p> <p>  <br /> <h3 class="MsoPlainText"><strong>Equities</strong></h3> <p class="MsoPlainText">Equities can be subdivided into <em>Domestic</em> and <em>International</em> categories. All equities are stock market investments, and of course not all stocks are created equal. This is where your financial planner (or a heck of a lot of research) will come in handy; differentiating the degrees of risk within an equity portfolio and reducing unnecessary risks. <strong>Although equities historically achieve the highest long term returns (by far) of any asset class, they will also see the most short-term fluctuation. </strong></p> <p class="MsoPlainText"><em>Large Cap</em> (short for market capitalization) or Blue Chip equities refer to large, stable companies that have a good history, long track record, and fairly steady returns. <em>Medium Cap</em> encompass smaller or newer companies but still widely recognized ones, and <em>Small Cap</em> investments will often be higher risk investments: start-ups or smaller companies in less popular market sectors. <strong>The more risk you assume, the higher your potential return will be – within reason. </strong></p> <p class="MsoPlainText">Domestic equities will generally be safer than International equities, because investing internationally subjects you to a new form of risk: <a href="/canadians-are-getting-fleeced-by-their-own-dollar" target="_blank">currency risk</a>. Your investment overseas may do gangbusters, but if your domestic dollar gains value comparatively in the meantime, you could actually see losses overall. </p> <p>  <br /> <h3 class="MsoPlainText"><strong>Sector</strong></h3> <p class="MsoPlainText">Sector investments refer to<strong> highly-specialized equities</strong>. They entail the highest amount of risk (along with potential for the highest gains), and should be limited in any portfolio. Examples of sectors include <em>Natural Resources or Science &amp; Technology</em>. </p> <p class="MsoPlainText">&nbsp;</p> <p class="MsoPlainText">&nbsp;</p> <p class="MsoPlainText">Now to <strong>determine your own personal asset allocation</strong> and how to diversify your portfolio across the above asset classes. Here are a few questions to ask that affect your portfolio’s asset allocation:</p> <p class="MsoPlainText">&nbsp;</p> <h3 class="MsoPlainText"><strong>What is Your Investment Time Frame?</strong></h3> <p class="MsoPlainText"><em>The shorter your time frame, the safer your portfolio needs to be</em>. The general rule is as follows:</p> <ul> <li>0-3 years = short term</li> <li>3-5 years = medium term</li> <li>6+ years<span>  </span>= long term</li> </ul> <p class="MsoPlainText">&nbsp;</p> <p class="MsoPlainText">You will now recognize that the asset allocation for a portfolio used to accumulate and save money for a major purchase (short term) will look different from a retirement portfolio (long term). Even those who are on the brink of retiring need to consider how long this portfolio needs to produce an income (count on 20-30 years), so don’t set your date of retirement as the date you cash everything out; you may be cheating yourself out of some much needed returns to keep pace with inflation over the duration of your retirement. </p> <p>  <br /> <h3 class="MsoPlainText"><strong>Do You Need an Income?</strong></h3> <p class="MsoPlainText">For somebody retiring as above, you may have a long investment time frame, but also the need to draw an income from the portfolio. <em>The more income you need (as a percentage of the entire portfolio), the more conservative a portfolio you should have</em>. </p> <p class="MsoPlainText">The next question to ask under this category is <strong>“how long will you draw down on the investment?”</strong> If you expect to deplete the fund in four years (as with a child’s post-secondary education portfolio), then your asset allocation should be more conservative than somebody looking for 30 years of income. </p> <p>  <br /> <h3 class="MsoPlainText"><strong>What is your Marginal Tax Rate? </strong></h3> <p class="MsoPlainText">Depending on how much income you earn, you may be looking to shelter some of the growth from taxation, or even convert highly taxable income (like interest income) to tax-efficient forms of income (like capital gains). Your marginal tax rate may determine how to invest money you don’t have a specific direction for, and may influence the specific choice of investments within your portfolio. </p> <p class="MsoPlainText">Also if you expect your income to change in the next few years, your asset allocation could be affected. Sheltering gains during years of high income and producing taxable investment income during lower-income years are all specialized asset allocation strategies. </p> <p class="MsoPlainText">&nbsp;</p> <h3 class="MsoPlainText"><strong>How Strong is Your Stomach?</strong></h3> <p class="MsoPlainText">This is probably one of the factors that will most influence your asset allocation choices, since you are the one who has to live with your investments. You may be young, saving for retirement, and showing all the technical signs of being a long-term aggressive investor, but<em> if you can’t handle the heat when the markets do loops, it’s not worth the heartache</em>. You will ultimately feel stressed out about money, will worry constantly, and will eventually bail – probably at the wrong time. </p> <p class="MsoPlainText">&nbsp;</p> <p> So how do these factors determine your investment mix? <strong>Here are six common types of investment personalities, and the recommended asset allocation for each. </strong><br /> <p class="MsoPlainText">&nbsp;</p> <h3 class="MsoPlainText"><strong>Cash</strong></h3> <p class="MsoPlainText">You need the money within a very short period of time and cannot afford to lose a cent of it. You are likely accumulating for something like a down payment on a house, or some imminent purchases. </p> <p class="MsoPlainText">Allocation:<strong> 100% “cash”</strong></p> <p>  <br /> <h3 class="MsoPlainText"><strong>Conservative</strong></h3> <p class="MsoPlainText">You have a short investment time frame, and a low tolerance for investment fluctuation. You may need to draw a hefty income from the portfolio now, or shortly. Hopefully you are not in a high income tax bracket, because a conservative portfolio will generate mostly taxable income (unless it is in a special tax-sheltered account). </p> <p class="MsoPlainText">Average Allocation: <strong>15% Equities (all Domestic), 85% Fixed Income</strong></p> <p class="MsoPlainText">&nbsp;</p> <h3 class="MsoPlainText"><strong>Moderate Conservative</strong></h3> <p class="MsoPlainText">You either have a stronger stomach or a longer time frame than your conservative counterpart. You likely are still working within a short to medium time frame, but have the ability to expose a little more of your portfolio to fluctuation, with the hopes that you will achieve higher overall returns. </p> <p class="MsoPlainText">Average Allocation: <strong>25% Equities (of which up to 10% can be International), 75% Fixed Income</strong></p> <p class="MsoPlainText">&nbsp;</p> <h3 class="MsoPlainText"><strong>Moderate</strong></h3> <p class="MsoPlainText">A true fence-sitter with a medium time frame, and/or a middle-of-the-road tolerance for risk, you are the picture of balance between fixed income and equities. </p> <p class="MsoPlainText">Average Allocation: <strong>50% Equities (of which up to 25% can be International), 50% Fixed Income</strong></p> <p>  <br /> <h3 class="MsoPlainText"><strong>Moderate Aggressive</strong></h3> <p class="MsoPlainText">You likely have a long time frame and a good ability to ignore market fluctuations to achieve your long-term goals of good returns. You are interested in sheltering income from taxation, and your moderate aggressive portfolio is likely geared towards retirement. </p> <p class="MsoPlainText">Average Allocation: <strong>80% Equities (of which up to 40% can be International and up to 10% can be Sector), 20% Fixed Income</strong></p> <p>  <br /> <h3 class="MsoPlainText"><strong>Aggressive</strong></h3> <p class="MsoPlainText">You are ready to hang it all out there, and in market scenarios (like the present) when news of the sky falling is rampant, you are cool as a cucumber. In fact, you are probably investing even more money right now (which is the perfect thing to do). You are interested in tax shelters, are young, and certainly have a long time frame to ride out the bumps. </p> <p class="MsoPlainText">Average Allocation: <strong>100% Equities (of which up to 50% can be International and up to 15% can be Sector)</strong></p> <p class="MsoPlainText">&nbsp;</p> <p class="MsoPlainText">&nbsp;</p> <p> <span style="font-size: 10pt; font-family: 'Courier New'"><strong>It doesn’t matter what stage of your life you are in: asset allocation applies to you!</strong> If you don’t have a portfolio to speak of and are looking at saving money each month, that doesn’t mean you don’t deserve to have a properly allocated portfolio: simply start now. There are lots of <a href="/mutual-funds-for-wise-bloggers" target="_blank">managed funds</a> out there that will cater to your specific investment personality and will take care of the asset allocation for you within the fund. All you have to do is worry about saving the money; your solid asset allocation plan and the investment managers will take care of the rest. </span></p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="">Nora Dunn</a> of <a href="">Wise Bread</a>, an award-winning personal finance and <a href="">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-1"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="">9 Safe Investments That Aren&#039;t Bonds</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="">Is There Such a Thing as a &quot;Safe&quot; Investment?</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="">One Simple Trick to Get the Best Tax Benefit From Your Retirement Portfolio</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="">Best asset allocation for your portfolio</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="">What&#039;s the Right Percentage of Cash for Your Portfolio?</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Investment asset allocation cash equity fixed income investment portfolio investment returns managed funds market fluctuation risk reward Sun, 19 Oct 2008 11:09:02 +0000 Nora Dunn 2531 at