Tips for Getting a Strategic Asset Allocation
Perhaps you want to know more about strategic asset allocation, an investment strategy that can help you set target allocations for your assets. If you have a limited investing experience, an investment management adviser can help you assemble a portfolio that can best suit your investor profile. In the meantime, read on to find out how you can get a strategic asset allocation.
How Can You Get a Strategic Asset Allocation?
Know Your Risk Tolerance
Your risk tolerance refers to the degree of volatility that you can manage to tolerate. For instance, you can choose to aggressively put more of your money into stocks if you’re the type of investor to hold steady even when the market looks rocky. Moreover, if you’re the type who easily gets nervous in the event of a downturn, it may be best if you invest conservatively.
Know Your Goals
Next, you need to determine what you want to achieve. Is it a fixed income, capital growth, or a combination of both? If your goal is to achieve capital growth, know that this demands aggressive investment allocation. On the other hand, if your objective is to achieve a fixed income, a more conservative approach is needed.
Know Your Allocation
The different classes of assets include cash, stocks, or bonds. When you’re trying to determine what percentage of your assets should be for each class, you need to study the risk level, as well as the long-term expected returns of each. To give you an idea, the least risky of all is cash, while bonds are riskier, and stocks are the riskiest. You need to understand that your potential for growth and loss is dependent on the risk involved in the investment.
Looking for an Investment Management Adviser?
If you want to learn more about the strategic asset allocation approach, schedule an appointment with the financial experts at 1879 Advisors today.