Wednesday, March 2, 2011

Mini Money Make-over: The Hidden Asset Class You Need to Know About - AOL's WalletPop Canada

Niles is doing everything right; at first blush anyway. He's 55 years old, has zero debt, $82,000 in his RRSP and $225,000 in his company's stock.

His RRSP portfolio is well diversified. His basic asset mix is 55% equity (various mutual funds), 40% debt (various bond and balanced mutual funds) and 5% cash. That's based on the careful analysis of his advisor and tailored to his situation (when he'll retire, his tolerance for volatility, etc.)

However, Niles' portfolio is grossly under-diversified if his company stocks are added to the mix and given the fact that his employment is in the same sector as his largest asset holding. If his industry were to face a sudden downturn, not only might his job be at risk, but too his biggest asset, his stocks.

Read on to see what changes Niles needs to consider.

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