How Should I Allocate My Assets?
What is asset allocation? It's the way in which you divide your dollars across different investment categories such as cash, equities or fixed income products. Which investments you ultimately make should be based on several factors; some of these factors include your tolerance for risk (market fluctuation) and your investment time horizon. Over 90% of investment returns are determined by asset allocation versus security selection, market timing and other factors.* Once you know your asset allocation, you are one step closer to building your investment portfolio.
*Source: Brinson, Singer, and Beebower, "Determinants of Portfolio Performance II: An Update," Financial Analysts Journal, May-June 1991
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