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Your investment horizon and age factor can be used as a general yardstick to evaluate your risk profile. The longer your time horizon, the less you need to worry about short-term fluctuations. Your actual investment will then depend on whether you are seeking growth, balanced or purely income returns. Determine the various investment classes under different risk categories (refer to Table 1 for a detailed breakdown). Table 1. Typical Classification of Investment Portfolios Age Risk Categories Primary Goal Principal Investments 20-40 Aggressive Growth stocks, unit trust funds 40-50 Moderate Growth + Income stocks, unit trust funds, bonds, bond funds 50-60 Moderate Income bonds, bond funds, savings and fixed deposits 60 and above Conservative Income savings, fixed deposits Some characteristics of various investment options are summarized in Table 2. Table 2. Typical Characteristics of Selected Investment Classes Stocks/Equity Growth Funds Bonds/Bond Funds Fixed Interest Short-term volatility Less volatile than stocks Little to no principal volatility Long-term growth potential Less growth potential than stocks Limited growth potential May provide income May provide more income than stocks Provides income After determining your risk profile and asset allocation, create a model for your portfolio. Do not forget to review your portfolio every 6-12 months as your objective may have changed and your risk tolerance may have also varied. Remember not to put all your eggs in one basket - know the benefits of diversification. Table 3. Model portfolio A typical portfolio for a young family is shown in Table 3. Notice that the family is looking for a combination of growth and income and has allocated a small portion for international investments for diversification. This asset allocation is for example only. Since individual investment goals, risk tolerance and time horizon varies from individual to individual, you need to determine your own risk tolerance and investment options before you invest. Once you have your portfolio. You are set. You now have a model to enable you to move on. Some planning is better than no planning at all. Whether you are 5 or 50, itís never too late or early to start.