Asset allocation is an investment strategy that aims to balance risk and reward by apportioning a portfolio's assets according to an individual's goals, risk tolerance and investment horizon. The three main asset classes - equities, fixed-income, and cash and equivalents - have different levels of risk and return, so each will behave differently over time.
Asset allocation can be one of the more important decisions you make when it comes to your investable assets. How your assets are allocated in stocks, bonds, and cash and equivalents can be the main factor when it comes to your investment results….more so than the selection of individual securities.
You may use different asset allocations for different goals. A short term goal may call for a conservative mix of assets while a longer term goal such as retirement or college saving may call for an asset allocation strategy with more exposure to stocks. Your tolerance for risk is also an important factor. If you are not comfortable investing in equities you may opt for a more conservative asset allocation even though you may have a long time horizon.
First National Wealth Management can answer your questions and help you develop a proper asset allocation that not only meets your risk tolerance but also works toward your specific objective.
*Asset allocation does not ensure a profit or protect against a loss.