Asset Allocation

Deciding on the right asset allocation may be your most important decision.
 
For certain long-term goals, particularly retirement, you will probably want to put your savings into several different types of products, such as stocks, bonds, and cash. How you divide your money between these different asset classes is called an asset allocation plan.

Deciding on the right asset allocation plan may be the most important investment decision you make. Research has shown that more than 90% of the returns investors achieve depends on what types of products they choose, while less than 10% is determined by the specific products they choose and when they buy them.

The time you have to reach your goal, your risk tolerance, and your financial goals will all affect how you allocate your assets. For example, someone in her or his twenties might put 80% of retirement funds in stocks and 20% in bonds, while someone in her or his fifties might divide retirement funds equally between stocks and bonds. (These are just examples; individual plans vary). 

You can ask a financial advisor to help you develop an asset allocation plan, or you can do it yourself using computer software, personal finance books, magazine articles, or the Internet. Once you have a plan, you'll need to monitor your assets and adjust for any changes in value that may have changed your asset allocation.

This website provides only a general overview of estate planning. You should consult an attorney, or perhaps a CPA or tax advisor for additional guidance.

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