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Dr. Don, help us reallocate! I am 28, married and working, although I anticipate staying home with the kids within the next two to three years. My salary is about $75,000. My husband is 30, owns his own business, and is making around $40,000 annually. We have been investing heavily over the past several years to establish a good base before cutting back to one income. I am concerned our current allocations are too tech-related, and am searching for alternative strategies to diversify for the long run. I will invest 10% of my annual income, plus a 2 1/2% company match, into my 401(k) plan until I stop working. We also contribute $2,000 annually to our Roth IRAs. My husband has no other retirement savings options. Are there any other options for retirement investments once I am no longer working and we both can contribute only $2,000 annually to our Roths? We have been diversifying through small-, mid- and large-cap markets, but have only minor exposure to the international market. We're young and have a long time horizon before needing any of the investments. Are there other types of investments we should be considering? Are we allocated properly? -- M.N.F.


I'm not worried about your technology exposure. I am concerned about your GE exposure. With 55% of your portfolio in

General Electric


, you're not tech-heavy, you're GE-heavy. I hasten to add, before GE fans start sending me nasty emails, that Jack Welch is a visionary corporate leader and I have nothing bad to say about the stock. It just shouldn't be 55% of your portfolio.

So with 55% of your portfolio in GE and 15% in cash, you've got the other 30% spread around 11 mutual funds and eight stocks. Yes, there is a technology emphasis in these investments, but when viewed in the context of your overall portfolio, that emphasis isn't excessive.


classifies GE as an industrial cyclical. Well, it is that and more.


describes GE as a diversified industrial corporation whose products include appliances, lighting products, aircraft engines and plastics. GE also provides television, cable, Internet, distribution, engineering and financial services. About 32% of its sales revenue comes from foreign sales, so by owning stock in this multinational corporation your portfolio has international exposure.

With money market funds yielding more than 6%, cash isn't a horrible place to be right now. But you should review your reasons for holding cash and decide if some of that money might be better invested. Roland Jones' recent

reporting on money market funds provides a good overview on cash investments. As I've written in earlier columns, I like the

Series I Savings Bond as an alternative investment for part of your cash holdings. You still need to hold cash for liquidity, but excessive cash holdings can over time create a drag on your portfolio's returns.

In reviewing the mutual funds in your 401(k), all three charge a

front-end commission, also known as a

load. Some retirement plans can get those loads waived. However, if you're paying front-end loads within your 401(k) funds, you need to find new funds for future investments. Check with your retirement plan administrator. If all the funds in your plan charge loads, you should lobby for alternative investments.

Your husband should research his retirement options as the owner of his own business. There are several tax-deferred options he can pursue, such as a Keogh plan, a Savings Incentive Match Plan for Employees, also known as a SIMPLE IRA, or a Simplified Employee Pension IRA plan, or SEP IRA. Contribution limits vary depending on his earned income and contribution caps, so he should work with his tax professional before establishing a plan. These alternatives will allow him to contribute a lot more than the annual $2,000 limit on a traditional or Roth IRA. For more information, see Vern Hayden's recent columns on


Keoghs and


I agree with your premise that as long as you're working, you should continue to maximize your eligible contributions to your 401(k) plan and IRA accounts. Being able to put this money aside in your twenties and thirties will make your retirement goals that much easier to realize.

You've got a couple of mutual funds,


Baron Asset and


Safeco Growth Opportunities, that aren't pulling their weight in the portfolio. Review their holdings and most recent reports and decide whether you think they are poised for a turnaround.

If you take my advice and reduce your position in GE, you should consider increasing your international exposure with part of the proceeds. Returns aren't particularly pretty in these funds right now, but with your long-term horizon additional international holdings are warranted. Yes, GE is giving you some international exposure, but diversification is a goal in international investments, too.

Several of your mutual funds concentrate in mid- and small-cap holdings. That's been good to you over the past year, but there's room in your portfolio for a large-cap mutual fund. Look for one with low annual expenses, experienced management and no sales loads.

Send In Your Portfolio

If you would like to submit your portfolio for a makeover, send it to Give us enough details -- dollar values or percentages -- so we can determine how your assets are allocated. Also tell us a little about yourself and your investing goals, and let us know how we can contact you if we have further questions. Though we'll use only your initials publicly, please include your full name so we can verify your identity. Unfortunately, we cannot guarantee that your portfolio will be selected for a makeover, nor can we promise to respond individually to everyone who submits a portfolio.

Dr. Don Taylor has been an investment professional for nearly 15 years, most recently as the treasurer for a nonprofit organization where he managed more than $300 million in assets. He is a chartered financial analyst, holds a Ph.D. in finance and has taught investment and personal finance courses at the University of Wisconsin and at Florida Atlantic University. Dr. Don's Portfolio Rx aims to provide general investing information. Under no circumstances does the information in this column represent a recommendation to buy or sell. Dr. Don welcomes your inquiries and feedback at