Asset Management
Successful investing involves time, discipline and a carefully selected balance of investment vehicles. Proper asset management is perhaps the single most important investment strategy to help ensure the value of your portfolio is protected.
From the old adage, "Don't put all your eggs in one basket," asset management and allocation is the simple concept of diversifying your assets among stocks, bonds and cash, each of which have a different level of risk. Proper tactical rebalancing of your securities will help put you on the road to reaching your financial dreams and goals while protecting you along the way.
Returns will generally depend upon how much risk you are willing to accept. As you get closer to retirement and your time horizon shortens, we will begin shifting your assets towards lower risk investment vehicles, such as bonds. For those with more time left until their retirement, we will recommend putting a higher percentage of the money into riskier investment vehicles, like stocks. Each asset class will react differently based on market conditions, and while one asset rises in value, others may simultaneously decrease.
Case Study
In the late 1990s, many investors put virtually all their money into high-flying technology stocks. When the market corrected in 2000, many of these investors experienced steep losses. While investors who may have all their money in bonds during this time may have missed out on the gains of the 1990's, they also were more likely to have missed the dramatic downturns. Similarly, leaving all your money in cash during these times would have steadily eroded its value due to inflation. Because no one can predict how the market will behave, making sure that your portfolio is balanced to withstand economic cycles is key.
Diversification, Not Timing
Asset allocation is a direct contrast to the concept of "market timing," the practice of attempting to time when to get in and when to get out of the market. Study after study has shown that market timing does not work over the long term, but rather that keeping your money invested and broadly diversified across asset classes accounts for a high percentage of your portfolio's return. Straying from the discipline of asset allocation can mean losing significant returns.
As your financial consultant, our role is to help you assess your needs and long-term goals and then work with you to build and manage a portfolio based on sound asset allocation. As your life situation changes, we'll review and make adjustments to make sure you're still on track to meeting your goals.
Call us today at 781-849-7200 to get started building an appropriate asset allocation mix for you.
Note
Asset allocation strategies do not assure a profit or protect against a loss in declining markets. No strategy can guarantee the objective or goal will be achieved.
There is no guarantee a diversified portfolio will enhance overall returns or outperform a non-diversified portfolio. Diversification does not insure against market risk.
