If creating an investment plan. For someone willing to take risks, how much should be planned for mutual funds or ETF's.
Identify an appropriate asset allocation for someone with an investment plan for mutual funds or ETF's. (Be sure to beware that diversification encompasses more than mere asset-class: there are also a sector, industry, national, time horizon, and other variables to consider)
Ideally, The percentage of portfolio to be allocated towards Mutual Funds or ETFs depends upon the age of Individual. Usually it is (100-Age of Individual). Lets say the person is 40 Years Old, then the maximum total % allocated towards Equity funds (including Mutual Funds, ETFs, etc) should be 100-40= 60%.
Again, the answer is totally subjective and varies from individual to individual. Several factors such as Age, family background, Investment Horizon, Retirement Goals, Risk appetite, etc are taken into consideration to design an appropriate investment plan.
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