Let’s assume that I want the following portfolio allocation:
- 40% Bond Index
- 30% U.S. Stock Index
- 30% International Stock Index
I’m 40 years old and I don’t have a pension coming.
Let’s also assume that I had this allocation 3 months ago, and that I’m ready to make a new deposit with fresh money.
In other words, when I checked my account three months ago, 40% of my money was represented by my bond index, 30% was represented by my U.S. stock index and 30% was represented by my international stock index.
But things have changed in the past three months. Stock markets have moved.
Here’s a three month performance chart representing each of the above indexes.
- The blue line is the Canadian short term bond index
- The red line is the S&P 500 U.S. index
- The green line is the first world international index
If I was going to add fresh money to my account today, which index would I buy, and why?