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Colin OShea

August 22 , 2016

Investment Basics: Asset Allocation - It’s Personal!

Asset Allocation - It’s Personal!

What’s your ideal mix of investments? Choosing the “right” asset allocation1 — the percentage of your portfolio you invest in each asset class — can have a big impact on your ability to reach your financial goals.

The right mix of stocks, bonds, and cash won’t be the same for every investor. The mix that’s right for you will depend on your investing objectives, time horizon, and risk tolerance.

Stocks for Growth

Time is your ally when it comes to retirement investing. In addition to giving you more years for your money to grow and compound, a long time horizon may allow you to take more risk with your investments. Allocating a large percentage of funds to stock investments may offer the greatest potential for earning returns that outpace inflation. Historically, stocks have generally outperformed other investments over the long term.2 Consider choosing a variety of stock types from different sectors of the economy.

Bonds for Balance

Stocks won’t always be at the head of the class, so putting some of your money in fixed income investments3 may help cushion your portfolio when stock values fall. Investing in bonds with varying maturities may provide some protection against fluctuating interest rates.

Cash as a Safety Net

Adding short-term cash investments, such as Treasury bills, to your portfolio can provide liquidity in an emergency. However, their rates of return are typically low and may not keep up with inflation. 


1 Asset allocation does not guarantee a profit or protect against losses.


2 Past performance doesn’t predict future returns.


3 Prices of fixed income securities may fluctuate due to interest rate changes. Investors may lose money if bonds are sold before maturity.


If you have any questions on asset allocation, click below to contact one of our financial professionals today. 


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