Maeda_Toshiie
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- Joined
- May 12, 2007
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Hello.
Not sure if this question has been asked before but...
When it comes to setting up portfolio allocations, I know it is usually stocks X% and bonds Y%.
In this case, does the bonds portion also include cash-on-hand (e.g. savings account, emergency fund)?
If not, then does anyone actually include a 3rd portion in the allocation (stocks X%, bonds Y%, cash Z%)? If so, anyone has any guidelines on it that I can study on?
Emergency fund is separate from the portfolio. Do NOT mix.
The portfolio will only contain equities, fixed income securities, and any cash you intend to invest. If you can get an cash account that pays >2% interest rate for SGD, you can count that as part of your bond component. HOWEVER, the sum inside that you count as your bond component must NOT be anything other than investible cash. Otherwise, the investible cash in your portfolio is a bit of a drag on returns and should be a small percentage in the first place.