May 18, 2010
Asset allocation is a term you have probably heard, but you may not understand what it means.
On the most basic level, it means not having all of your monies in one type of asset class. The three basic asset classes are CASH, BONDS and EQUITIES.
Taking it to the next level, we look at the sub-categories of asset classes within the three basic asset classes. For instance, with equities there can be large, mid and small company securities, international securities, emerging market securities, and many more sub-classes.
If you have your monies too concentrated in an asset class or classes, or if you don't have exposure to many asset classes, you risk incurring significant portfolio volatility.
You also should have an appropriate balance between companies focused on Growth and Value styles as well.
For a more thorough explanation of asset allocation and to have a check-up done on your portfolio to see if you are properly diversified, you should contact your trusted Financial Advisor. Remember, the greater your diversification the greater your chances of achieving your important financial goals.
(This article contains the current opinions of the author but not necessarily those of Brighton Securities Corp. The author's opinions are subject to change without notice. This blog post is for informational purposes only. Forecasts, estimates, and certain information contained herein should not be considered as investment advice or a recommendation of any particular security, strategy or investment product. References to specific securities and their issuers are for illustrative purposes only and are not intended and should not be interpreted as recommendations to purchase or sell such securities).