Do You Have the Right Asset Allocation?
Every individual and household has an asset allocation. Checking, savings, and financial securities are part of the mix, and for many households, the proportionate mix is passively determined. “It is what it is,” to restate an overused phrase from NBA press conferences.
Active asset allocation melds investment choices to a saver’s risk profile. Last week, I proposed three tools you can use to assess your risk profile that extended the build-out of the “Investing in Stocks..” chapter. Offerings used by Vanguard and Schwab and the tool I use with my students can be part of your Tuesday wake-up call. Share it with your household and family, and have a discussion about your findings. Those are informative, easy conversations.
Today: Finding asset allocation funds and why nearly everybody should know the costs and benefits of target-date funds, a special pre-built allocation plan used in retirement planning. The installment closes with the technique for portfolio rebalancing, an activity that an investor should engage in annually. If your portfolio is misaligned to your risk tolerance because of recent stock market performance, you will find a simple approach to re-aligning in this chapter.
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