Broker Check
20 - Investing Controllables Part 3 - Asset Allocation

20 - Investing Controllables Part 3 - Asset Allocation

March 31, 2023

Who May Benefit? Everyone

What Is It? Asset allocation is the mixture of asset categories like stocks, bonds, cash, and other assets in your portfolio. It may also include "asset classes," which are more specific types within those categories. For example, stocks may include growth, value, international, large-cap, small-cap, etc. Bond asset classes include government, corporate, short-term, long-term, high-yield, and more.

Why Is It Valuable? Most of your long-term volatility and returns are directly related to your asset allocation. Choosing your asset allocation should come BEFORE choosing individual investments, as it plays a critical role in determining your investment performance and managing risk. Proper asset allocation can help you achieve your financial goals while minimizing unnecessary risks.

How Do I Do This? Your Risk Tolerance and Risk Capacity numbers should guide you to the appropriate asset allocation for your specific needs and goals. Research various asset allocation strategies using online resources or financial books. To create a personalized allocation plan that aligns with your financial objectives, consider consulting with a financial professional or using asset allocation tools available online.