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Asset Allocation

Asset allocation is the process of selecting a mix of asset classes that closely matches your financial profile in terms of your investment preferences and tolerance for risk. It is based on the premise that the different asset classes have varying cycles of performance, and that by investing in multiple classes, the overall investment returns will be more stable and less susceptible to adverse movements in any one class.

All investments involve some sort of risk, whether it’s market risk, interest risk, inflation risk, liquidity risk, tax risk. An individualized asset allocation strategy seeks to mitigate the risks of any one asset class through diversification and balance..

Individual Strategy

When done properly, your allocation of assets will reflect your desired goals, priorities, investment preferences and your tolerance for risk. Asset allocation is an individualized strategy. There really is no perfect mix of assets. Your personal strategy is built on the careful consideration of the key elements of your financial profile.

Investment Objectives

What are you looking to achieve using your investment dollars?

- Improve current lifestyle
- Achieve capital growth
- Fund a specific goal (college education, etc.)

Risk Tolerance

This reflects your comfort level with market fluctuations that can result in losses. Inflation risk and interest risk need to be considered as well.

Investment Preferences

You may prefer one asset class over another, based on a certain bias or interest towards the characteristics of that class.

Time Horizon

The length of time you are willing to commit to achieving your objectives.


Investing in a mix of asset classes may have varying tax consequences.

An Evolving Strategy

A sound asset allocation strategy includes periodic reviews.

About the only certainty when it comes to the financial markets is that the markets will change and so will your financial situation. Through market gains and losses, a portfolio can become unbalanced, and it may be important to make adjustments to your allocation. As you move through life’s stages, your needs, preferences, priorities and risk tolerance change. Therefore, your asset allocation strategy should also change.

Asset allocation, which is driven by complex mathematical models, should not be confused with the much simpler concept of diversification.

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Disclaimer: Asset Allocation does not guarantee a profit or protect against losses in declining financial markets.