Asset allocation should be aligned with financial goals and risk tolerance from "summary" of All About Asset Allocation, Second Edition by Richard Ferri
Asset allocation is a critical component of any investment strategy. It involves deciding how to divide your investment portfolio among different asset classes, such as stocks, bonds, and cash. The key to successful asset allocation is ensuring that your investment mix aligns with your financial goals and risk tolerance. Your financial goals are the targets you hope to achieve with your investments. These goals can include saving for retirement, buying a house, or funding a child's education. Your asset allocation should be tailored to help you reach these specific goals. For example, if you are saving for retirement and have a long time horizon, you may be able to take on more risk in your portfolio by investing a larger percentage in stocks. Risk tolerance is another important factor to consider when determining your asset allocation. Risk tolerance refers to your ability and willingness to withstand fluctuations in the ...Similar Posts
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