What is Asset Allocation and Its Benefits to Investor

Posted by Grace under Investing on March 1, 2017

What is asset allocation? Do you need need it? Asset allocation is an investing strategy on how investor distributes his total assets in different vehicle. Asset allocation is one best way to diversify your investments. In investing, you shouldn’t stop learning and knowing when and where to invest money. Every year, your needs will change. When you’re needs changed, you need to change a plan. When you change a plan, you also need to change your investment strategy. It doesn’t mean you should top to become focused in investing. You just need to properly allocate your assets because you’re getting older. When you’re getting older, the risk you can afford also changed.

If you decide to invest 60% of your money in stocks, 20% in bonds, and 20% in a money market fund, you have just made an asset-allocation. The benefits of asset allocation is that it helps the investors to balance the risks versus reward by distributing the assets properly according to investor’s risk appetite, investment horizon and investment goal.


But the question is how do you know how much percentage of your money should be invested in stocks, bonds or money market funds?

Ask a CFP for Asset Allocation Advice

Only you and a CFP Certified Financial Planner know how much percentage of your money you should put in every vehicle. Here in Return on Investment blog (InvestmentTotal.com), I recommend to every readers and visitors to always consult with the financial experts preferably to CFP, to avoid investing mistakes. Consult with a Certified Financial Planner or Registered Investment Advisor on what investment instrument is the best in your age. Let them asses your risk profile and your risk profile, financial needs, financial goal, status and your age will be your guide in asset allocation.

However, if you really want to know the guide I found on other personal finance and investing references, you can read InvestmentTotal.com investment tips for beginners.

Asset Allocation by Age

For other guides, InvestmentTotal.com wrote asset allocation strategies by age. The risk that a 20-year old investor can afford is very different from the risk that an investor whose age is 50. Besides, the total assets of a 20 year old and the assets of 50 year old are also different.

If you’re 20, 30, 40 , 50 years old or 60 years old and above, the following pages will give you ideas on how to allocate your assets.

  • Asset Allocation for Investors Age 30
  • Asset Allocation for Investors Age 45
  • Asset Allocation for Investors Age 65 and Above

Don’t ignore asset allocation. Don’t just invest money. Invest wisely. Did you find this article useful? Do you allocate your assets or you just invest in only one vehicle? Do you have any ideas about asset allocation by age? Share your opinion below. Happy investing!

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