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Frequently Asked Questions

What asset allocation is best for me?

The right asset allocation for you depends on so many factors, there is no easy answer. Every person has different financial goals, living standards, income potential, fears, risk tolerances, and so on. The basic items you need to understand before determining an asset allocation are your timeline, your risk tolerance, and your financial goals. Once you understand how much time you have and what you hope to accomplish, you can begin developing an allocation that meets your needs while undertaking just the right amount of risk you are comfortable with. If you are unable to come up with an allocation using the tools online or by evaluating sample allocations, a personal financial advisor may be the way to go. Just make sure he or she has your best interests in mind and doesn't try to sell you on expensive products simply because they make money on it. Look for a fee-based advisor who makes money only by helping you.

My portfolio is down, what went wrong?

The market moves up and down. Just because you are down doesn't mean you should sell or change to lower risk assets. It simply means the market is on the down slope of the natural cycle. If you are really worried about a loss, you may need to re-evaluate your risk tolerance levels. Most people are investing for the long-term. Periods of loss are bound to happen, but the trend has been a positive return over a 10 year time span for almost a century. Selling at a loss only ensures you miss out on a sale on investments.

On the other hand, if your portfolio consistently declines, perhaps it is not as diversified as it could be. Emphasis on certain sectors or a poor mixture of asset classes may result in most of your portfolio invested in one area. Take a quick look at your portfolio and see if the asset classes are diversified and that the allocations meet your plan. You may need to rebalance to restore the assets to your allocation plan.

Page last modified 3/21/2012