A common question when investors are assembling a portfolio of investments is the following: Does it make sense to include 401(k) and other retirement investments when deciding on an asset allocation?

Quite frankly, I think it makes perfect sense to look at all of your investments as one portfolio, especially if you have similar time horizons for these investments.

A common trap for investors is to own the same types of mutual funds (perhaps in an IRA or 401(k) plan) as they do individual stocks. This may mean that you are overweighted in one particular stock classification.

My feeling is that you should have investments across a variety of stock classes - small-cap, mid-cap, large-cap, and international. Thus, if you have 25% of your non-retirement funds in foreign investments, you may not want to have an additional 50% of your 401(k) plan in foreign funds.

Of course, if you have different time horizons for your investments - for example, you plan to trade more actively your 401(k) investments than your non-retirement investments, or vice versa - you probably should look at the accounts as different portfolios.

Again, the primary driver for assembling a portfolio is time horizon. If all of your investments have the same holding period, then consider all of your investments within a single portfolio.