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Managing Your Investment Assets Asset allocation is the decision of how you divide your investment portfolio between various assets. Typical asset categories include cash or
Managing Your Investment Assets
Asset allocation is the decision of how you divide your investment portfolio between various assets. Typical asset categories include cash or short
term securities Treasury bills, CDs etc. bonds municipal bonds, corporate bonds, etc. and equity funds or equities stocks stock mutual
funds, etc.
The following table illustrates several model portfolios that you can use as a basis for your own investment plan, depending on such factors as your
time horizon, risk tolerance, and investment philosophy.
Suppose that Andrea is beginning a longterm investment plan for her retirement savings. She plans to retire at least years in the future, so she
has plenty of time for her investments to grow. Because Andrea is investing for the long term, she has a high risk tolerance and would like to grow her
investments as aggressively as possible. Andrea is
investor with a time horizon of
Using the model portfolios provided, what is the ideal asset allocation for Andrea's portfolio, based on her time horizon and investment philosophy?
If no funds are recommended to be allocated toward an asset, enter into the numeric entry box for that asset.
In general, if you have a longer time horizon and a higher risk tolerance, then a higher percentage of your portfolio should be in
If you
are investing for a shorter time horizon, or if you have a more conservative investment philosophy, then you should invest a greater percentage of
your portfolio in
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