Despite my licenses, I am not an investment expert, and I don’t begin to pretend to be one. That being said everyone should know their asset allocation, and have an elementary understanding of asset allocation. I repeat everyone should have an idea as to what they are invested in, whether they have an advisor who is doing it for them or they are doing it themselves.
I truly believe that this crash has been terrible, at least in part, because people either didn’t give a damn as to how they were allocated – or didn’t know. I know it isn’t an original statement, but a 55-year-old shouldn’t have been 100% equities.
In my previous two posts (Setting up a Roth IRA – 4 Easy Steps Part 1 and Part 2) I talked openly about setting up my younger brother’s Roth IRA. Part 1 discusses why a Roth works, while Part 2 gives us the meat of what I actually set up.
In response to my 2 part Series, a great blogger, PT Money, commented:
As for your allocation, at first I thought, why bother with a target date fund if you’re going to pick other funds? But then I saw your other funds were on opposite ends of the spectrum. So they likely balance each other out.
Granted, I have some sick tools at work (for those in the business – E-Money, Morningstar Enterprise Edition, etc.) to get a quick snapshot I use Morningstar’s Instant X-Ray Tool.
What is Morningstar Instant X-Ray?
Morningstar describes their tool perfectly (insert sarcasm here),
Instant X-Ray analyzes your holdings the way only Morningstar can
Basically, you put in your mutual funds, stock symbols, etc., and it breaks down your:
- Asset Allocation
- Stock Style Diversification
- Stock Type
- Stock Sector
- Stock Stats
- Even Where in the World you are Investing
It is a ridiculously badass tool that is free and requires NO registration.
Using Morningstar Instant X-Ray on My Brother’s Roth IRA
When my brother wanted to set up his Roth IRA, I first had to get acquire his risk tolerance – which to my surprise was moderately aggressive. Taking that into account along with his age, 26, and how much he was able to put away ($200/mo), I decided we need an equity-based portfolio.
To jog your memory, I set up the following Portfolio
| MF Name | Symbol | % |
| Blue Chip Growth | TRBCX | 25 |
| Retirement 2055 Fund | TRRNX | 50 |
| US Bond Index | PBDIX | 25 |
As PT pointed out earlier, I wanted the Retirement Fund to diversify into a bunch of different sectors.
Well, My results:
Cash – 4.05- U.S. Stocks – 55.50
- Foreign Stocks – 12.62
- Bonds – 27.44
- Other – 0.39
- Not Classified – 0.00
Cash – 4.05
U.S. Stocks – 55.50
Foreign Stocks – 12.62
Bonds – 27.44 
Other – 0.39
Not Classified – 0.00What did Morningstar Instant X-Ray Tool Show me?
My brother may be too heavily invested in bonds. That being said, I want this Roth to start to grow and then I will rebalance.
Have you used Morningstar Instant, X-Ray Tool? Are there better tools out there?
