A 3-Step Asset Allocation Plan

by | Oct 6, 2022 | Stock Market

1 2 3 A 3-Step Asset Allocation Plan Munn Gray & Associates Private Wealth Management Dallas Texas
Diversifying your investments can reduce risk and bring about a more diverse investment portfolio that may better serve you in case of any future financial losses. There are many ways to do this, such as investing in stocks or bonds depending on what type is most suitable for the goals one has set out themselves with; it’s also possible (and common) that people have feelings towards different asset allocation strategies which means they might prefer certain types over others based off personal preference alone.  Diversify  How can you diversify your investment portfolio? The three types of investments are stocks, bonds, and cash.
  • Stocks have both high potential for gain but also risk that is greater than those in other asset classes like precious metals or real estate; however, they can be considered if you want to take on more volatility so there’s no sure thing with this investment choice- especially since many people believe we’re due an economic collapse soon!
  • Bonds offer less risky returns compared to their counterparts while still being able to perform well when inflation kicks into gear (which has happened before), giving them great value once interest rates peak.
  • The most common type of account is a cash equivalent. These include savings accounts, certificates from deposits and money market funds that offer low-risk with little potential return on investment.
Why is it important to have a well-constructed portfolio that takes into account all three types of investments? A properly allocated and diversified investment portfolio will help you manage the level of risk in your returns. By investing across these 3 asset classes, we can tailor our investments towards specific goals or values while reducing overall volatility for an optimal return on capital.  Consider this three-step approach to asset allocation: 
  1. Be honest with yourself about the level of risk. Some people believe that investing in a relatively unknown start-up company with great ideas is an excellent risk tolerance, while others prefer to stick by more stable companies. That means there’s not one right answer for everyone; it depends on your comfort level and commitment when things go up or down.
  2. Outline your financial goals. You may be surprised to learn that there is more than one way of investing your money. For example, some people use their assets as collateral for a loan and then invest the proceeds into various funds or stocks based on market fluctuations—but this strategy could also backfire if prices drop too far. You should consider what you want from an investment before making any decisions so it’s easier when choosing an appropriate fund type such us conservative bonds which will grow over time rather than taking risks with investments hoping they’ll pay off eventually. A great starting point would be to write down your financial goals.
  3. Consider setting a timeline for your goals. When thinking about your goals, it’s important to consider what time period we are talking about. If you have 30 years until retirement or only five before then start planning accordingly- this will help ensure that the money is spent wisely and on valuable items for both now (short term) as well as later decades(longer).
Complex investment  Your portfolio is a complex investment that you can diversify across time, risk tolerance and goals. The further away from retirement your financial goal the more aggressively it should be invested in stocks versus bonds or vice versa when nearing this milestone so as not to put all eggs into one basket too soon before knowing what will come next for life after work. Diversification does not guarantee investment returns and is a strategy used to reduce risk. It’s important that you call us if we can help get your assets invested in the right way for YOUR unique situation!   *Any opinions are those of Roy Gray and not necessarily those of Raymond James.  Every investor’s situation is unique, and you should consider your investment goals, risk tolerance and time horizon before making any investment decision.  Prior to making an investment decision, please consult with your financial advisor about your individual situation.  Investing involves risk and you may incur a profit or loss regardless of strategy selected, including diversification and asset allocation.