Sometimes you have sleepless nights worrying about which stocks to buy and sell, to possess those funds and to dump and or in bonds.
These are all legitimate concerns, but the biggest determinant of your success as an investor, your acumen in not selecting specific stocks, bonds or funds for your portfolio. No, it will be your asset allocation. That is, the way you slice up your portfolio in broad categories of, say, large-cap growth stocks and value stocks and triple A bonds and so on.
There are many opportunities for investors today. Making use of these opportunities by strategically spreading your money in a number of different instruments can use to protect your portfolio and improve your chances of achieving a desired yield.
It is important for investors to understand that diversification in building a balanced portfolio helps reduce risk and improve returns.
Asset allocation is another way to diversify. It uses the fact that when it comes to risk and reward, financial classes such as equities, bonds and money market instruments (money value) represents all behave quite differently!
Stocks, for example, offer the highest returns among the three "asset classes" but they also carry the highest risk of losses.
Bonds are not as lucrative, but they offer much more stability than stocks.
Money market yields are puny, but you will never lose your initial investment.
An asset allocation strategy looks at your specific goals and circumstances and determine which asset gives you the optimal mix of risk and reward.
Asset allocation is a process to visit again and again as you continue to build your portfolio in your life. Again Learn about the events that a period of re-evaluation of your asset allocation may suggest!
Chances are that, over time, the value of your investment in shares will be faster than grow. In bonds and cash equivalents of your investments Eventually you will probably have a greater percentage of your money invested in stocks recommended than your original strategy.
When this situation occurs, your portfolio will be exposed to more risk. To ensure that your assets are invested appropriately periodically rebalance your investments!
Ioannis Evangelos (Akis) Haramis was born in Athens, Greece in 1951. He studied in Greece, in the U.S. and in Belgium and is active in the equity markets since 1972. Since 2002 he is New Business Development Managing Director at an Investment Bank and the publisher of
No comments:
Post a Comment