What is a good asset allocation for a 25 year old?
Check out some common portfolios compared: Note that all these portfolios are loosely based on Modern Portfolio Theory, a theory of how to maximize reward given a risk tolerance introduced by Harry Markowitz. The theory behind the Gone Fishin' Portfolio and the Couch Potato Portfolio (more info) is that you can make money by rebalancing once a year or less.  You can take a look at 8 Lazy ETF Portfolios to see other lazy allocation percentages. One big thing to remember - the expense ratio of the funds you invest in is a major contributor to the return you get.  If they're taking 1% of all of your gains, you're not.  If they're only taking .2%, that's an automatic .8% you get.  The reason Vanguard is so often used in these model portfolios is that they have the lowest expense ratios around.  If you are talking about an IRA or a mutual fund account where you get to choose who you go with (as opposed to a 401K with company match), conventional wisdom says go with Vanguard for the lowest expense ratios. The standard advice is that stocks are all over the place, and bonds are stable. Not necessarily true. Magazines have to write for the lowest common denominator reader, so sometimes the advice given is fortune-cookie like. And like mbhunter pointed out, the advertisers influence the advice. When you read about the wonders of Index funds, and see a full page ad for Vanguard or the Nasdaq SPDR fund, you need to consider the motivation behind the advice. If I were you, I would take advantage of current market conditions and take some profits. Put as much as 20% in cash.  If you're going to buy bonds, look for US Government or Municipal security bond funds for about 10% of your portfolio. You're not at an age where investment income matters, you're just looking for some safety, so look for bond funds or ETFs with low durations. Low duration protects your principal value against rate swings. The Vanguard GNMA fund is a good example. $100k is a great pot of money for building wealth, but it's a job that requires you to be active, informed and engaged. Plan on spending 4-8 hours a week researching your investments and looking for new opportunities. If you can't spend that time, think about getting a professional, fee-based advisor. Always keep cash so that you can take advantage of opportunities without creating a taxable event or make a rash decision to sell something because you're excited about a new opportunity. "First, I'd recommend that you separate ""short-term"" assets from ""long-term"" assets in your head.  Short-term assets are earmarked for spending on something specific in the near future or are part of your emergency fund.  These should be kept in cash or short bond funds.   Long-term assets are assets that you can take some risks with and aren't going to spend in the next few years.  Under normal circumstances, I'd recommend 80% stocks/20% bonds or even 70/30 for someone your age, assuming you're saving mainly for retirement and thus have a correspondingly long time horizon.  These portfolios historically are much less risky than 100% stock and only return slightly less.   Right now, though, I think that anyone who doesn't absolutely need safety keep 100% of their long-term assets in stocks.  I'm 26 and this is my asset allocation.  Bond yields are absolutely pathetic by historical standards.  Even ten year treasury yields are comparable to S&P 500 dividend yields and likely won't outperform inflation if held to maturity.  The stock market is modestly undervalued when measured by difference between current P/E ratio and the historical average and more severely undervalued when you account for the effects of reduced inflation, transaction costs and capital gains taxes on fair valuation.  Therefore, the potential reward for taking risk is much higher now than it usually is." Those are all predictions.  To the core. With anything, I'd consider the source carefully before taking any kind of advice.  If it's from a financial magazine, who advertises with them?  What are they selling?  How well do they recognize which side of the bread is buttered? That, and I'd get a lot of advice, see how it matches with your goals, and choose. All of that being said, you do have time to recover should you blow it. "In my opinion, the key variable for you (and others) is not age, but ""vintage."" Your ""age"" suggests that you were born in the mid-1980s, in the middle of a bull market. The most remunerative investing periods for you are likely to be in your childhood (past) and middle age (forties and early fifties). Also your, ""old-old"" period (around age 80, in the 2060s), if you live that long. For now, you can, and perhaps should invest cautiously, like today's 40-year olds, with a heavy emphasis on bonds. The main difference between you and them is that you can shift to stocks in about ten years, in your mid to late 30s, while they will find it harder to do so when approaching old age."
&gt;There are a lot of repeats of good old programs - these are what I watch - not anything new . I usually watch programs that are 15 to 25 years old . Trouble is that I have often already seen them .  the trick is to go farther back. Well things might be different in the UK. The US is a TV waist land. I've gotten hooked on the old Perry Mason shows recently. Black and white. Always did like Raymond Burr.   http://xfinitytv.comcast.net/tv/Perry-Mason/97361/full-episodes#episode=Video-1463632165 You're missing the concept of systemic risk, which is the risk of the entire market or an entire asset class. Diversification is about achieving a balance between risk and return that's appropriate for you. Your investment in Vanguard's fund, although diversified between many public companies, is still restricted to one asset class in one country. Yes, you lower your risk by investing in all of these companies, but you don't erase it entirely.  Clearly, there is still risk, despite your diversification. You may decide that you want other investments or a different asset allocation that reduce the overall risk of your portfolio. Over the long run, you may earn a high level of return, but never forget that there is still risk involved. bonds seem pretty worthless, at least until I retire According to your profile, you're about my age. Our cohort will probably begin retiring sometime around 2050 or later, and no one knows what the bond market will look like over the next 40 years. We may have forecasts for the next few years, but not for almost four decades. Writing off an entire asset class for almost four decades doesn't seem like a good idea. Also, bonds are like equity, and all other asset classes, in that there are different levels of risk within the asset class too. When calculating the overall risk/return profile of my portfolio, I certainly don't consider Treasuries as the same risk level as corporate bonds or high-yield (or junk) bonds from abroad.  Depending on your risk preferences, you may find that an asset allocation that includes US and/or international bonds/fixed-income, international equities, real-estate, and cash (to make rebalancing your asset allocation easier) reduces your risk to levels you're willing to tolerate, while still allowing you to achieve returns during periods where one asset class, e.g. equities, is losing value or performing below your expectations. You are really tangling up two questions here: Q1: Given I fear a dissolution of the Euro, is buying physical gold a good response and if so, how much should I buy? I see you separately asked about real estate, and cash, and perhaps other things.  Perhaps it would be better to just say: what is the right asset allocation, rather than asking about every thing individually, which will get you partial and perhaps contradictory answers.  The short answer, knowing very little about your case, is that some moderate amount of gold (maybe 5-10%, at most 25%) could be a counterbalance to other assets. If you're concerned about government and market stability, you might like Harry Browne's Permanent Portfolio, which has equal parts stocks, bonds, cash, and gold. Q2: If I want to buy physical gold, what size should I get? One-ounce bullion (about 10 x 10 x 5mm, 30g) is a reasonably small physical size and a reasonable monetary granularity: about $1700 today. I think buying $50 pieces of gold is pointless: However much you want to have in physical gold, buy that many ounces. "Your broker, Ameritrade, offers a variety of Exchange Traded Funds (ETFs) that you can buy and sell with zero commission.  An ETF is like a mutual fund, but you buy and sell shares the same way you buy and sell shares of stocks.  From your point of view, the relevance of this is that you can buy and sell as many or as few shares as you like, even down to a single share.  Note that to get the commission-free trades on the available ETFs you have to sign up for it in your account profile.  Be sure to do that before you enter any buy orders. You'll want to start by looking at the Ameritrade's list of commission-free ETFs.  Notice that they are divided into different categories:  stocks, bonds, international, and commodities.  Which categories you pick from will depend on your personal investing goals, time horizon, risk tolerance, and so on.  There are lots of questions and answers on this site that talk about asset allocation.  You should read them, as it is the most important decision you will make with your portfolio. The other thing you want to be aware of is the expense ratio for each fund.  These expenses reduce the fund's return (they are included in the calculation of the net asset value of the shares), so lower is definitely better.  Personally, I wouldn't even consider paying more than about 0.10% (commonly read ""10 basis points"" or ""10 bp"") for a broad-based domestic stock fund.  For a sectoral fund you might put up with as much as 20 bp in expenses.  Bond funds tend to be a little more expensive, so maybe allow as much as 25 bp, and likewise for international funds.  I've never invested in commodity funds, so I'll let someone else opine on appropriate expense ratios for those. Once you've decided what funds you want (and have signed up for commission-free trades), all you have to do is enter the trade orders.  The website where you manage your account has tutorials on how to do that.  After that you should be all set. Good luck with your investing!" I looked a bit at the first 3, .24% expense.  There's a direction to not discuss individual investments here, so the rest of my answer will need to lean generic. I see you have 5 funds. I'm surmising it's an attempt at 'diversifying'. I'll ask you - what do these five, when combined, offer that a straight S&P 500 index (or some flavor of extended market) doesn't?  I've gone through the exercise of looking at portfolios with a dozen funds and found overlap so great that 2 or 3 funds would have been sufficient.  There are S&P funds that are as low as .05%. this difference may not seem like much, but it adds over time.  To your last point, I'd consider a Solo 401(k) as you're self employed. One that offers the Roth option if you are in the marginal 15% bracket. You need to find a fiduciary advisor pronto. Yes, you are getting a large amount of money, but you'll probably have to deal with higher than average health expenses and lower earning potential for years to come. You need to make sure the $1.2 million lasts you, and for that you need professional advice, not something you read on the Internet. Finding a knowledgeable advisor who has your interests at heart at a reasonable rate is the key here.  These articles are a good start on what to look for: http://www.investopedia.com/articles/financialcareers/08/fiduciary-planner.asp https://www.forbes.com/sites/janetnovack/2013/09/20/6-pointed-questions-to-ask-before-hiring-a-financial-advisor/#2e2b91c489fe http://www.investopedia.com/articles/professionaleducation/11/suitability-fiduciary-standards.asp You should also consider what your earning potential is. You rule out college but at 26, you can have a long productive career and earn way more money than the $1.2 million you are going to get. "The thing about the glide path is that the closer you're to the retirement age, the less risk you should be taking with your investments. All investments carry risk, but if you invest in a volatile stock market at the age of 20 and lose all your retirement money - it will not have the same effect on your retirement as if you'd invest in a volatile stock market at the age of 65 and then lose all your retirement money. Static allocation throughout your life without changing the risk factor, will lead you to a very conservative investment path, which would mean you're not likely to lose your investments, but you're not likely to gain much either. The point of the glide path is to allow you taking more risks early with more chances of higher gains, but to limit your risks down the road, also limiting your potential gains. That is why it is always suggested to start your retirement funds early in your life, to make sure you have enough time to invest in potentially high return stocks (with high risk), but when you get close to your retirement age, it is advised to do exactly the opposite. The date-targeted funds do that for you, but you can do it on your own as well. As to the academic research - you don't need to go that far. Just look at the graphs to see that over long period investments in stocks give much better return than ""conservative"" bonds and treasuries (especially when averaging the investments, as it usually is with the retirement funds), but over a given short period, investments in stocks are much more likely to significantly lose in value." As others have noted, you can do better than a checking or savings account. If you're going to invest emergency money, the vehicle you put it into should be: Liquid - Wherever you put it, you should be able to quickly cash it out. Highly liquid exchange traded products are good for this.   Low volatility/drawdowns - If you need at least 6 months of your paycheck to cover you in the event of an emergency, you don't want to park it in a portfolio that can potentially lose 30% value. Insured - Your investments should have SIPC coverage (protection against losses resulting from failure on part of broker). Moderate/Steady Growth - If the emergency fund doesn't grow, you'll need to continually pump money into it. My 'steady growth' portfolio is majorly allocated to fixed income. Within that, a major portion is allocated to high yielding instruments. Over the past 10 years, it's seen at least a 7% annualized return.