Based on the asset allocation patterns of Benjamin Graham and John C. Bogle, following are the few selected models:
1) Benjamin Graham’s 50/50 Balance Asset Allocation Model
Benjamin Graham specifies a portfolio with 50% in equity and 50% in debt. The balance will always be restored by selling equities when that portion rises, or by transferring from the debt when the equity portion declines.
2) John C. Bogle’s Asset Allocation Models
Portfolio model based on the nature of asset allocation:
25% in government securities
25% in high-grade corporate bonds
50% in bond market index
20% in aggressive growth stocks
10% in sector specific stocks
30% in long-term bonds
20% in short-term bonds
40% in single debt index
Portfolio model based on life cycle phases:
20% Debt
40% Debt
30% Debt
50% Debt
Bogle gives a nice rule of thumb for asset allocation, which states that ‘Debt portions of an investor’s portfolio should be equal to his age. So let a 30 years old investor make 70/30 asset allocation, and at age 50, let him balance it out. And so on.’
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