be cautious about ETFs.. your entry point is so important.

Timing when is a good price to buy into ETFs can ease your way into the market.

I understand your 'theory' of using ratios to govern your decision. But here is a scenario I propose to you:

You enter the stock market at its HIGHEST. Lets say your bond level starts to drops and so u top up. But then quickly, your stock position also starts to drop..

Sooner or later, you are at a losing point..
You see what i'm getting at.. same situation can happen if both rise at unequal rates, placing your ratios out of balance as you attempt to correct it..

Using ratios to govern your investment strategy is missing a crucial point of stock markets.. The market is emotionally fueled and driven.

Asset location does not make sense. At what point do you adjust your ratios? One day? a week? a month? Everytime you decide to adjust, that cost money as you move your funds around. Probably will wipe your gains..

A better way of doing this is to time your ETF investment at a good entry point and leave it 100% as Stock.. When markets begin to shift, then switch some to Bonds or buy up cheaper ETFS.. Alternatively, diversify your portfolio to include investments in share dividends and property. Allocation based on ratios may look good in theory, but it doesn't work applied..

This post has been edited by the99percent1: Nov 28 2014, 12:06 PM