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Chapter 14. Betting on the Right Horse > Match Your Investor Profile to an Inve... - Pg. 145

Betting on the Right Horse 145 Step three.Time to divvy up your assets. John starts with cash. The range is 5­15 percent. He chooses the midpoint, which is 10 percent (for cash), and writes the number under Cash at the bottom of the worksheet. For fixed income, he decides on 30 percent. Stock is 50 percent. Aggres- sive stock is 10 percent. As long as John stays within the ranges shown, his portfolio will come out consistent with a moderately aggressive investor. Take a few moments now to divvy up your money and complete each blank box at the bottom of Figure 14.2. Make sure that your numbers total 100 percent. You've just completed one of the most important steps in successful investing. You know it as asset allocation. Remember, asset allocation is simply divvying up your money into the primary investment categories of safety, income, and growth. And you just did it! The process of asset allocation should not be confused with an asset allocation fund. The first is something that you do; the latter is some- thing that you buy. Step four.Now go to Figure 14.3. It's time to pick your 401(k) funds. First, transfer the asset category totals at the bottom of Figure 14.2 to the Total This Category boxes on the right side of the Figure 14.3 worksheet. We will work upward from the totals boxes. Starting with Cash, you have 10 percent to allocate. Because there is only one cash-equivalent fund, Schwab Money Fund, you put all 10 percent there.