BUSINESSWEEK ONLINE : JULY 17, 2000 ISSUE
COVER STORY

In Assets, It's All in the Mix
These models may help plan your future

When saving for retirement, the right asset allocation can make all the difference. You want a portfolio with enough growth to meet your goals but enough stability to carry you if one of your riskier holdings blows up.

To see what a well-constructed retirement portfolio should look like, look at the pie charts below. Standard & Poor's Corp. (which, like Business Week, is a unit of The McGraw-Hill Companies) has created model portfolios for three hypothetical investors: a 30-year-old man, a 45-year-old woman, and a 55-year-old man. (While women, on average, live longer than men, the difference isn't enough to alter the model portfolios.) For more on these allocations, go to www.personalwealth.com or www.businessweek.com/investor/.

The younger you are, the more risk you can take with your investments. That's because you have more time to recover from market setbacks. If you're 30, you can afford to eschew bonds and concentrate mostly in large-cap stocks, mixing in smaller portions of small-cap and international equities. As you age, preserving capital becomes more important. By age 55, you'd be wise to put half your assets in bonds.

S&P also has given us a list of funds and stocks that you may want to use in its recommended allocations. S&P thinks you should keep at least half of your retirement assets in individual stocks even if you're only 10 years from retirement. But if your portfolio is worth less than $50,000, you should stick with equity funds, to ensure that your holdings are spread across a diversified selection of companies.

By TRIPP REYNOLDS

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