Asset allocation is important and investors should monitor theirs to make sure their portfolios are not too risky or aggressive but also not too defensive. Studies show that asset allocation is responsible for nearly 90% of portfolio’s long-term return. Not knowing your asset allocation is a fundamental mistake.
Determine investment goals, time horizon and risk tolerance. A 30-year-old’s portfolio should look very different from an 80-year-old’s. Custom your personal asset allocation and construct your portfolio based on your personal investment goals. Consider your specific circumstances: age, experience, time horizon and risk tolerance, for example.
If you are too busy to give your investments the attention they deserve or if you are an inexperienced or emotional investor, have a professional asset manager run your portfolio.
Sven Franssen