What's the most conservative split of financial assets for my portfolio in today's market?
Before investing, absolutely follow the advice in mbhunter's answer. There is no safe investment (unless you count your mattress, and even there you could find moths, theives, or simple inflation taking a chunk out of your change).  There is only maximizing your reward for a given level of risk - and there is always risk. This question should be enshrined somewhere on the Q&A site for its comprehensive list of sources for information on asset allocation.  The tag is also going to have tons of good information for you. To answer your question on what slice of the pie is devoted to what, you can check out some common portfolios given by U. S. experts for U. S. investors - these should be convertible into Australian funds. Another portfolio that is, like all those above, loosely based on Modern Portfolio Theory for maximizing reward for a given level of risk is the Gone Fishin' Portfolio. A common denominator amongst these portfolios is that they emphasize index funds over mutual funds for their long-term performance and preference lazy management (yearly rebalancing is a common suggestion as the maximum level of involvement) over active management.  You can see more Lazy Portfolios. This is a somewhat complicated question because it really depends on your personal situation.  For example, the following parameters might impact your optimal asset allocation: If you need the money before 3 years, I would suggest keeping almost all of it in cash, CDs, Treasuries, and ultra safe short-term corporate bonds. If however, you have a longer time horizon (and since you're in your 30s you would ideally have decades) you should diversify by investing in many different asset classes.  This includes Australian equity, international equity, foreign and domestic debt, commodities, and real estate.  Since you have such a long time horizon market timing is not that important. You don't say your level of consumer debt.  You don't say how much of an emergency fund you have. If you have debt, pay it off before you invest.  If you don't have an emergency fund (X months' expenses, pick your own X) get that before investing. If you have neither, get a small emergency fund, and then throw as much as you can to getting rid of debt. Beyond that, look for prudent investments.  They're not the same as conservative investments. To know what's prudent, learn about the ones you listed and what determines their prices.  Learn how or why they go up or down in value. "If you can afford the time and are looking for more deep, and fun, investment tips, check out http://gurufocus.com. Great for more fundamental analysis of ""Intelligent Investor"" type Benjamin Graham-style businesses.  No use scatter-shooting the stock exchange hoping to find good value businesses. Even blue-chips have an increasingly uncertain future (except IMHO certain world dominators like KO, WMT, XO and MCD)." The safest place to put money is a mixture of cash, local municipal bond funds with average durations under two years and US Treasury bond funds with short durations.  Examples of good short term US municipal funds: I'm not an active investor in Australian securities, so I won't recommend anything specific. Because rates are so low right now, you want a short duration (ie. funds where the average bond matures in < 2 years) fund to protect against increased rates. The problem with safety is that you won't make any money. If your goal to grow the value of your investment while minimizing risk, you need to look at equities. The portfolios posted by justkt are a great place to start.
"First, I'd like to congratulate you on your financial discipline in paying off your loans and living well within your means.  I have friends who make more than twice your salary with similar debt obligations, and they barely scrape by month to month. If we combine your student loan debt and unallocated income each month, we get about $1,350.  You say that $378 per month is the minimum payment for your loans, which have an average interest rate of about 3.5%.  Thus, you have about $1,350 a month to ""invest."" Making your loan payments is basically the same as investing with the same return as the loan interest rate, when it comes down to it.  An interest rate of 3.5% is...not great, all things considered, and barely above inflation.    However, that's a guaranteed return of 3.5%, more or less like a bond.  As noted previously, the stock market historically averages 10% before inflation over the long run. The US stock market is right around its historic high at this point (DJIA is at 20,700 today, April 6th, 2017 - historic high hit just over 21,000 on March 1, 2017).  Obviously, no one can predict the future, but I get the feeling that a market correction may be in order, especially depending on how things go in Washington in the next weeks or months.  If that's the case (again, we have no way of knowing if it is), you'd be foolish to invest heavily in any stocks at this point. What I would do, given your situation, is invest the $1,350/month in a ""portfolio"" that's 50/50 stocks and ""bonds,"" where the bonds here are your student loans.  Here, you have a guaranteed return of ~3.5% on the bond portion, and you can still hedge the other 50% on stocks continuing their run (and also benefiting from dividends, capital gains, etc. over time).  I would apply the extra loan payments to the highest-interest loan first, paying only the minimum to the others.  Once the highest-interest loan is paid off, move onto the next one. Once you have all your loans paid off, your portfolio will be pretty much 100% stocks, at which point you may want to add in some actual bonds (say a 90/10 or 80/20 split, depending on what you want).  I'm assuming you're pretty young, so you still have plenty of time to let the magic of compounding interest do its work, even if you happen to get into the market right before it drops (well, that, and the fact that you won't really have much invested anyway). Again, let me stress that neither I nor anyone else has any way of knowing what will happen with the market - I'm just stating my opinion and what my course of action would be if I were in your shoes." "Like Jeremy T said above, silver is a value store and is to be used as a hedge against sovereign currency revaluations.  Since every single currency in the world right now is a free-floating fiat currency, you need silver (or some other firm, easily store-able, protect-able, transportable asset class; e.g. gold, platinum, ... whatever...) in order to protect yourself against government currency devaluations, since the metal will hold its value regardless of the valuation of the currency which you are denominating it in (Euro, in your case).  Since the ECB has been hesitant to ""print"" large amounts of currency (which causes other problems unrelated to precious metals), the necessity of hedging against a plummeting currency exchange rate is less important and should accordingly take a lower percentage in your diversification strategy.  However, if you were in.. say... Argentina, for example, you would want to have a much larger percentage of your assets in precious metals. The EU has a lot of issues, and depreciation of hard assets courtesy of a lack of fluid currency/capital (and overspending on a lot of EU governments' parts in the past), in my opinion, lessens the preservative value of holding precious metals.  You want to diversify more heavily into precious metals just prior to government sovereign currency devaluations, whether by ""printing"" (by the ECB in your case) or by hot capital flows into/out of your country.  Since Eurozone is not an emerging market, and the current trend seems to be capital flowing back into the developed economies, I think that diversifying away from silver (at least in overall % of your portfolio) is the order of the day. That said, do I have silver/gold in my retirement portfolio?  Absolutely.  Is it a huge percentage of my portfolio?  Not right now.  However, if the U.S. government fails to resolve the next budget crisis and forces the Federal Reserve to ""print"" money to creatively fund their expenses, then I will be trading out of soft assets classes and into precious metals in order to preserve the ""real value"" of my portfolio in the face of a depreciating USD. As for what to diversify into?  Like the folks above say: ETFs(NOT precious metal ETFs and read all of the fine print, since a number of ETFs cheat), Indexes, Dividend-paying stocks (a favorite of mine, assuming they maintain the dividend), or bonds (after they raise the interest rates).  Once you have your diversification percentages decided, then you just adjust that based on macro-economic trends, in order to avoid pitfalls. If you want to know more, look through: http://www.mauldineconomics.com/ < Austrian-type economist/investor http://pragcap.com/ < Neo-Keynsian economist/investor with huge focus on fiat currency effects" "My two cents: I am a pension actuary and see the performance of funds on a daily basis. Is it normal to see down years? Yes, absolutely. It's a function of the directional bias of how the portfolio is invested. In the case of a 401(k) that almost always mean a positive directional bias (being long). Now, in your case I see two issues: The amount of drawdown over one year. It is atypical to have a 14% loss in a little over a year. Given the market conditions, this means that you nearly experienced the entire drawdown of the SP500 (which your portfolio is highly correlated to) and you have no protection from the downside. The use of so-called ""target-date funds"". Their very implication makes no sense. Essentially, they try to generate a particular return over the elapsed time until retirement. The issue is that the market is by all statistical accounts random with positive drift (it can be expected to move up in the long term). This positive drift is due to the fact that people should be paid to take on risk. So if you need the money 20 years from now, what's the big deal? Well, the issue is that no one, and I repeat, no one, knows when the market will experience long down moves. So you happily experience positive drift for 20 years and your money grows to a decent size. Then, right before you retire, the market shaves 20%+ of your investments. Will you recoup these damages? Most likely yes. But will that be in the timeframe you need? The market doesn't care if you need money or not. So, here is my advice if you are comfortable taking control of your money. See if you can roll your money into an IRA (some 401(k) plans will permit this) or, if you contribute less that the 401(k) contribution limit you make want to just contribute to an IRA (be mindful of the annual limits). In this case, you can set up a self-directed account. Here you will have the flexibility to diversify and take action as necessary. And by diversify, I don't mean that ""buy lots of different stuff"" garbage, I mean focus on uncorrelated assets. You can get by on a handful of ETFs (SPY, TLT, QQQ, ect.). These all have liquid options available. Once you build a base, you can lower basis by writing covered calls against these positions. This is allowed in almost all IRA accounts. In my opinion, and I see this far too often, your potential and drive to take control of your assets is far superior than the so called ""professionals or advisors"". They will 99% of the time stick you in a target date fund and hope that they make their basis points on your money and retire before you do. Not saying everyone is unethical, but its hard to care about your money more than you will." "As JoeTaxpayer notes in his comment, ""answers"" to this are really just opinions, so here's mine, for what it's worth. If your risk tolerance is 5 out of 5, you shouldn't have anything in Treasuries.  Those are basically the most conservative of all investments.  This would probably mean no TIPS as well.  If you're more like 4.5 out of 5, you could have some, but just a little; a 30% allocation to government securities is quite conservative.  If you want to diversify across different asset classes, you could consider a bond fund like (for instance VBMFX, the Vanguard total bond market index fund).  Your portfolio doesn't currently contain any (non-government) bonds, which is something to consider. 20% seems like quite a large allocation to REITs.  Most sample portfolios I've seen allocate no more than 10% to REITs, often no more than 5%.  There are some that have more like the 20% you're envisioning, but you might want to ponder that a bit more especially in light of your concerns about REITs being at an all-time high. As for your question about all-time highs, it's reasonable to think about, but I think waiting for 30-50% off all-time highs is unrealistic.  Looking at a chart of VFINX (essentially the S&P 500), I see that at the nadir of the recent downturn, in early 2009, the market was at about 50% of its pre-crash all-time high.  At the nadir of the dot-com bust, the market was about 45% off its pre-crash high.  If you're waiting for it to be 50% off it's all-time high, you're not just waiting for ""a good time to invest"", you're waiting for a major crash. It could certainly make sense not to immediately put everything into US stocks, but that doesn't mean you should put nothing in.  As Trevor Wilson commented, you could put some of the money in and then gradually add the rest over time, reducing the risk of unluckily buying at the peak.  (This can also reduce the psychological angst of worrying about whether you're doing the right thing, which is worth taking into account.)  Also note that if you get rid of the treasuries, you eliminate a good chunk of the stuff that you thought was too close to the peak anyway. Your two basic points (asset allocation and low-cost funds) have a strong Boglehead flavor.  You may already have looked at the Bogleheads wiki; if not you should take a look.  If you are comfortable with that philosophy (and I think it's a sound one), you should remember that part of that philosophy is not worrying about ""timing the market"".  You pursue a buy-and-hold strategy if you believe the market will go up in the long term and don't care much about what it does in the short term.  That said, as mentioned above, you might want to ease in your investment over time, rather than buying all at once, if only to avoid tearing your hair out if the market goes down in the short term. Incidentally, your proposed portfolio is similar to this one that they mention, although as I said above I think this is too conservative if you are 30 years old and consider yourself a ""5 out of 5"" in terms of risk tolerance.  I'm not sure if you already saw that in your research, but since that portfolio apparently has a name and is known, you might be able to find information about its risks and benefits by searching for discussion of it by name." "A diversified portfolio (such as a 60% stocks / 40% bonds balanced fund) is much more predictable and reliable than an all-stocks portfolio, and the returns are perfectly adequate. The extra returns on 100% stocks vs. 60% are 1.2% per year (historically) according to https://personal.vanguard.com/us/insights/saving-investing/model-portfolio-allocations To get those average higher stock returns, you need to be thinking 20-30 years (even 10 years is too short-term). Over the 20-30 years, you must never panic and go to cash, or you will destroy the higher returns. You must never get discouraged and stop saving, or you will destroy the higher returns. You have to avoid the panic and discouragement despite the likelihood that some 10-year period in your 20-30 years the stock market will go nowhere. You also must never have an emergency or other reason to withdraw money early. If you look at ""dry periods"" in stocks, like 2000 to 2011, a 60/40 portfolio made significant money and stocks went nowhere. A diversified portfolio means that price volatility makes you money (due to rebalancing) while a 100% stocks portfolio means that price volatility is just a lot of stress with no benefit. It's somewhat possible, probably, to predict dry periods in stocks; if I remember the statistics, about 50% of the variability in the market price 10 years out can be explained by normalized market valuation (normalized = adjusted for business cycle and abnormal profit margins). Some funds such as http://hussmanfunds.com/ are completely based on this, though a lot of money managers consider it. With a balanced portfolio and rebalancing, though, you don't have to worry about it very much. In my view, the proper goal is not to beat the market, nor match the market, nor is it to earn the absolute highest possible returns. Instead, the goal is to have the highest chance of financing your non-financial goals (such as retirement, or buying a house). To maximize your chances of supporting your life goals with your financial decisions, predictability is more important than maximized returns. Your results are primarily determined by your savings rate - which realistic investment returns will never compensate for if it's too low. You can certainly make a 40-year projection in which 1.2% difference in returns makes a big difference. But you have to remember that a projection in which value steadily and predictably compounds is not the same as real life, where you could have emergency or emotional factors, where the market will move erratically and might have a big plunge at just the wrong time (end of the 40 years), and so on. If your plan ""relies"" on the extra 1.2% returns then it's not a reasonable plan anyhow, in my opinion, since you can't count on them. So why suffer the stress and extra risk created by an all-stocks portfolio?" "You mentioned three concepts: (1) trading (2) diversification (3) buy and hold.   Trading with any frequency is for people who want to manage their investments as a hobby or profession.  You do not seem to be in that category.  Diversification is a critical element of any investment strategy.  No matter what you do, you should be diversified.  All the way would be best (this means owning at least some of every asset out there).  The usual way to do this is to own a mutual or index fund.  Or several.  These funds own hundreds or thousands of stocks, so that buying the fund instantly diversifies you. Buy and hold is the only reasonable approach to a portfolio for someone who is not interested in spending a lot of time managing it.  There's no reason to think a buy-and-hold portfolio will underperform a typical traded portfolio, nor that the gains will come later.  It's the assets in the portfolio that determine how aggressive/risky it is, not the frequency with which it is traded. This isn't really a site for specific recommendations, but I'll provide a quick idea:  Buy a couple of index funds that cover the whole universe of investments.  Index funds have low expenses and are the cheapest/easiest way to diversify.  Buy a ""total stock market"" fund and a ""total bond fund"" in a ratio that you like.  If you want, also buy an ""international fund.""  If you want specific tickers and ratios, another forum would be better(or just ask your broker or 401(k) provider).  The bogleheads forum is one that I respect where people are very happy to give and debate specific recommendations. At the end of the day, responsibly managing your investment portfolio is not rocket science and shouldn't occupy a lot of time or worry.  Just choose a few funds with low expenses that cover all the assets you are really interested in, put your money in them in a reasonable-ish ratio (no one knows that the best ratio is) and then forget about it." "Look at the Calvert Funds. They have a variety of ""socially responsible"" funds with published selection standards. Beware of mixing personal politics with business." Unless and until you are ready to do the ground work and get your hands dirty in the market, it is better to let the money where it is. But how to distribute money in which asset classes, industry etc is your choice to make. But remember that a big investment company doesn't guarantee that you will always earn a return higher than the market or it is safe with them. They are also bound to make mistakes and go bust, but it would be quite rare for companies, with billions of assets because they have strict checks in place and invest with extreme caution and proper research. One option is to try dabbling in the markets yourself, slowly, not everything at once. You will learn a lot and there are loads of information on the net and books in stores which could get you started. You will need to do a lot of groundwork to beat the market. That is difficult but not impossible. People have done it time and time again and they have put in hard work to do so. And I don't see with a little bit of work and time, why you shouldn't be able to do that, unless and until you are lazy and don't intend to do it.