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3 Quick Points to Simplify Asset Allocation
Learn about balancing risk and reward in your portfolio
When it comes to investing, asset allocation is important to consider. Asset allocation is an investment strategy that aims to balance risks and rewards in your portfolio. The main asset classes you should be familiar with are equities, fixed income, real estate, commodities, cryptocurrencies, and cash. In taking a look at your portfolio, your asset allocation boils down to your risk tolerance and the goals you have laid out for yourself. When it comes to breaking down how much asset allocation should matter to you, the following 3 points will help to simplify it:
1. The Main Asset Classes
2. Asset Allocation Helps Solidify Your Investment Plan
3. A Website That Helps Simplify Asset Allocation
Note: I am not a financial advisor. I do not know your financial situation. I am sharing this information for educational purposes only.
1. The Main Asset Classes
As stated earlier, when it comes to asset allocation, the main asset classes to consider are equities, fixed income, real estate, commodities, cryptocurrencies, and cash. When it comes to equities, this includes securities such as stocks, real estate investment trusts (REITs), ETFs that track a basket of stocks, and ETFs that track a basket of REITs. Fixed income includes securities such as bonds and ETFs that track a basket of bonds. Real estate includes investment-based residential and commercial properties that you own directly. Commodities includes gold, silver, and ETFs that track a specific commodity or a basket of commodities. Cryptocurrencies include digital currencies such as Bitcoin, Ethereum, and Litecoin. Cash is your money set aside for investing that has not been invested yet.
2. Asset Allocation Helps Solidify Your Investment Plan
There is no specific formula for asset allocation. It all boils down to what you would like for yourself regarding returns, cashflow, and risk reduction. Once you are able to determine what kind of asset allocation you want, you are getting closer to solidifying your investment plan.
