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Focus on asset allocation from "summary" of The Little Book of Common Sense Investing by John C. Bogle
One of the most important principles in investing is asset allocation. This simply means spreading your investments across different types of assets, such as stocks, bonds, and cash. By diversifying your portfolio in this way, you can reduce the overall risk of your investments. Many investors make the mistake of trying to pick individual stocks or time the market in order to beat the average returns. However, research has shown that asset allocation is the primary driver of investment returns. In fact, studies have found that asset allocation accounts for over 90% of the variability in a portfolio's returns over time. The beauty of asset allocation lies in its simplicity. By focusing on diversification rather than trying to outsmart the market, investors can achieve a more stable and predictable return on their investments. This approach also helps to minimize the impact of market fluctuations on your portfolio. To implement a successful asset allocation strategy, it is important to consider your investment goals, risk tolerance, and time horizon. By aligning your asset allocation with these factors, you can create a portfolio that is tailored to your individual needs.- Asset allocation is about taking a long-term view of investing and avoiding the pitfalls of short-term thinking. By focusing on diversification and staying the course through market ups and downs, investors can build a solid foundation for their financial future.
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