Asset allocation is the process of selecting a mix of asset classes that closely matches an investor’s financial profile in terms of their 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 may 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 though diversification and balance. 

Individual Strategy

When done properly, an investor’s allocation of assets will reflect their desired goals, priorities, investment preferences and tolerance for risk. Asset allocation is an individualized strategy, so there really is no perfect mix of assets.  Your individual strategy is built on the careful consideration of the key elements of your financial profile:

Investment Objectives: What you hope to achieve with your investment dollars – improve current lifestyle; achieve capital growth; fund a specific goal, such as a college education

Risk Tolerance: 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.  We make every effort to accommodate your wishes.  In addition, many of our clients are concerned about the impact of their investments and we take that into account as well when making investment recommendations.  As a result, we offer both Socially Responsible and Sustainable portfolios, as well as our Standard models.

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

Taxation: Investing in a mix of asset classes will 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 they 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 people move through life’s stages their needs, preferences, priorities and risk tolerance change and so too must their asset allocation strategy.   

Learn more about asset allocation by contacting us today.

Note: Diversification and asset allocation strategies do not assure profit or protect against loss.