- Tax Planning
- Investments 1: Before you Invest
- Investments 2: Your Investment Plan
- Investments 3: Securities Market Basics
- Investments 4: Bond Basics
- Investments 5: Stock Basics
- Investments 6: Mutual Fund Basics
- Investments 7: Building Your Portfolio
- Investments 8: Picking Financial Assets
- Investments 9: Portfolio Rebalancing and Reporting
- Retirement 1: Basics
- Retirement 2: Social Security
- Retirement 3: Employer Qualified Plans
- Retirement 4: Individual and Small Business Plans
- Estate Planning Basics
Step 1: Create a Weighted Benchmark That Includes All Asset Classes
Step 1: Create a Weighted Benchmark That Includes All of Your Asset Classes
Suppose you have three asset classes in your portfolio—stocks, bonds, and cash. Your target allocations, benchmarks, and quarterly returns are shown below:
Asset Class Target Allocations Benchmark Quarterly Return
| Stocks | 60% | S&P 500 | 2.5% |
| Bonds | 30% | Lehman aggregate | 1.2% |
| Cash | 10% | Lehman cash | 0.5% |
| Overall portfolio | 100% | Overall return | 1.72% |
A different benchmark is assigned to each component: use the target asset allocations listed in your investment plan as your target asset allocations.
