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In the short term, these portfolios should come with a warning label. The "Classic" Growth Portfolio - 80% Growth / 20% Income and Cash.

Like the Aggressive Portfolio, this places a high priority on long-term investment growth. The Balanced Growth Portfolio - 60% Growth / 40% Income and Cash.

This portfolio seeks both long term growth and income. Again we continue to trade risk for return, but with an average income return of a little over 2%, we begin to shift the focus off pure growth.

For those following the 'prudent person' rule, the 60/40 allocation is a favorite. Often seen in trusts, this model can serve both income and principal beneficiaries.

Although other models are allocated toward income, the above models are the major allocations appearing in most financial readings.

Let's face it, you're on a roll. next getting down to your attorney's office to sign the new Living Trust and then diligently tracking down your pocket to fund the trust, you should be congratulated. You're one of the responsible ones - 70% of the people who die each year in the United States haven't even troubled to get a will. Frankly, you're an inspiration to us all. But to seal the nomination for the financial Oscars, a little work on your investments could go a long way.

Asset apportionment anyone? Does this term sound familiar? It should - financial planners, mutual fund companies, trust companies and stock brokers have drilled this into our heads for the last decade or so. It's the latest and greatest. (Actually, Harry Markowitz was playing from every quarter with this back in the 1950's but, until the Lent of powerful PCs, Modern Portfolio Theory was only used by the big institutional investors).

For the most part, capital syntax also works. As long as we keep it in perspective and understand that our most important investment objective is our "well being" and not some bonehead's "optimum portfolio allocation"; we'll be okay. Our money is meant to work for us, not the other way around.

Basically, principal stipulation divides investments into three major resources classes: Growth, Income, and Cash. Like making spaghetti sauce, concurring the ingredients in different ratios is going to give us different results. Ultimately, we will stay with the ratio that suits us best. Don't worry hard the neighbors' tastes. They can peel their own garlic. Like any good recipe, though, it does help to have some guidelines.

Here's three beneath contempt growth allocations:

1. The enemy Growth Portfolio - 100% Growth / 0% Income and Cash.

In the short term, these portfolios should come with a warning label. The volatility can upset all but the strongest constitutions. Historically, this is a long-term strategy. If you want to smooth out the ride, time horizons of at least 10 years are often suggested.

Returns over the long term should equate to overall stock market returns. The pattern of return will also reflect the various up and down years of the market.

This should be obvious, but you shouldn't be looking for much income from this signification seeing as how it's not going to be there. Sure, you may be able to go into principal for income needs, but growth allocations generally don't like to be tampered with. If you need income, other allocations will probably suit you better. This portfolio is best for those with a high risk tolerance and a time horizon of some duration.

2. The "Classic" Growth Portfolio - 80% Growth / 20% Income and Cash.

Like the masterful Portfolio, this places a high priority on long-term investment growth. It just does it without quite the extreme volatility, which of course is by some handcuff and cash to the mix. The time horizon to enjoy the results are also shortened. There may be some give up in overall return, but many people will readily trade return for lessened volatility. Income yield typically can trial 1.5%.

This still isn't for the meek, but does start to define mainstream investing in the United States.

3. The consonant Growth Portfolio - 60% Growth / 40% Income and Cash.

This portfolio seeks both long term growth and income. for the optimum time horizon is cut to 7 years or so, it doesn't demand a lifetime attempt prior to enjoying its rewards. albeit we continue to trade risk for return, but with an besetting income return of a little over 2%, we set in to shift the focus off pure growth.

For those following the “prudent person” rule, the 60/40 structuring is a favorite. Often seen in trusts, this model can serve both income and principal beneficiaries.

Although other models are allocated toward income, the straight up models are the major allocations exposure in most financial readings. As guideposts to putting together your portfolio, you should naturalize independently wealthy with how each of these models operates in determining both risk and return.

Common Sense Investing
By Chip Dahlke, Living Trust Network

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