The asset allocation that I had chosen for my retirement account was 65% equities and 35% fixed income. I further broke the equities down to 27.5% Canadian, 22.5% US, 10% International and 5% real estate.

For some (strange) reason, I was managing my taxable and non-taxable accounts separately. Well, that doesn’t make sense since they are all trying to achieve the same goal: my financial independence when I retire.

So, I looked at my whole portfolio together. My current allocation is as follows:

Cash 16.67%

Fixed Income 21.57%

Canadian Equity 25.91%

US Equity 18.29%

International Equity 11.53%

Real Estate 6.03% (does not include my home)

Note: The reason for the high cash component is that I had a GIC come due recently which I have not yet reinvested. If I add the cash and fixed income together, I get 38.24% for fixed income. So, my whole portfolio is still well within my asset allocation.

After having done some reading and thinking about my asset allocation as a whole, I have decided on a new asset allocation. Not radically different or anything. Here it is:

Cash 5%

Fixed Income 30%

Real Estate 5%

Canadian Equity 25%

US Equity 19%

International Equity 14%

Emerging Markets 2%

Basically, I have added a cash asset that I didn’t have before. The cash asset includes money that I have purposely allotted for investment. Also, I have decreased my US equity and increased my International equity. I was reading that the US and Canadian equity markets are highly correlated. However, the International equity markets are not as highly correlated.

As I add money to my portfolio, I will add to those allocations that are below their designated weighting.