I should title this as – Investment Damage Control. Ok, “after” so called asset allocation – you find out that screwed up. Then what? Well, rectifying the loss is not easy. Today, a lot of people have seen their investments reduce by half – yep 40% – 50%! There’s a saying –
You don’t want to jump off a roller-coaster.
If you withdraw – you stand the chance of seeing the market recover and you are sitting with idle cash (assuming you didn’t invest it elsewhere in more profitable investments, which brings me to another point – don’t withdraw unless you’re quite confident that the new investment will do better than existing).
Ok, damage control.
I assume you’re going to be generating income from other sources besides your investing. In that case, the first step is to build a cash fund – an emergency fund that can take care of your living expenses for 12 to perhaps even 24 months! (You should know ur monthly expenditure average after living so long…)
You can achieve this by NOT investing for a while. That means, instead of putting your monthly savings into investments – you park them as cash. Automatically, your allocation to cash increases. The sooner u do this the better. If you need to liquidate some really stupid investments – do so at your own risk, but whatever you do… try to build this cash allocation “amount” first.
Then follow the simple formula… 80% equity (of which 50% in international/emerging markets) . 20% Gold & Cash. I’m not including real estate for a reason.