Assumptions about investor risk tolerance implied in age-based asset allocation models are just plain wrong.

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For ideas on how to construct a diversified portfolio, visit the Asset Allocation Models page on AAII.com.

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The results of tactical asset allocation models recommended by the major brokerage firms are regularly published in the Journal.

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These strategies, which dynamically adjust asset allocation models to fit the needs and profiles of different investors, will use iShares ETF to fulfill their mandates.

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Rather than reacting to short-term shifts in sentiment, diversify your portfolio (see our Asset Allocation Models for suggestions on how), rebalance as necessary and think long-term.

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Retirees need to be cautious of traditional asset allocation models.

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Figure 1 compares three age-based asset allocation models.

FORBES: The Flight Path Approach to Age-Based Asset Allocation

Does the allocation make sense given your age, goals and investments you own outside of your 401(k)? (See our Asset Allocation Models for examples of how you may want to allocate your portfolio.) If not, you should change your 401(k) holdings to bring it back in line with your goals.

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