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Here's Where You Should Put Your Money, Based On Your Risk Appetite

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Here's Where You Should Put Your Money, Based On Your Risk Appetite

Major U.S. equity indices rose throughout July, but at the same time, bonds have also performed well. According to analysts at Argus Research, for the first time in seven months, the Barclays U.S. Aggregate Bond Index gained 4.6 percent.

The question many investors are now asking is what is the optimal portfolio allocation.

Argus' analysts believe investors should continue favoring stocks over bonds, as this has been an ongoing trend for the past seven years, and there is no reason to switch courses now. Stocks are still "attractive," even at current valuations and especially when compared to bonds.

The analysts added that stocks could benefit from economic trends, including a core U.S. GDP growth of 2.0 percent (give or take 50 basis points either way) and interest rates remaining low until at least next year.

Related Link: Dangerous Deep Debt Rationalizations All Generations Fall For

Meanwhile, corporate profits can still surprise on the upside given a still strong economic growth outlook and stability in the U.S. dollar.

With that said, the analysts offered the following guidelines for investors to continue based on their own individual risk tolerance level:

    1. Conservative: 40 percent stocks, 55 percent bonds and cash, 3 percent in commodities, 2 percent in real estate.
    2. Moderate: 60 percent stocks, 32 percent bonds and cash, 5 percent in commodities, 2 percent in real estate.
    3. Aggressive: 70 percent stocks, 22 percent bonds and cash, 5 percent commodities, 2 percent real estate.

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