You can start with this short risk tolerance questionnaire and asset allocation worksheet to make sure you have the right amounts in stocks, bonds, and cash based on your time frame and your comfort (or discomfort) with the ups and downs of the market.
Assumptions about investor risk tolerance implied in age-based asset allocation models are just plain wrong.
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To fix this problem, you can begin by taking this questionnaire for asset allocation guidelines based on your risk tolerance and time horizon.
Beyond the burden of looking at multiple account statements, having more than one account could make it more difficult to determine proper asset allocation across a portfolio and assess risk tolerance, she says.
If you decide that a hands-off approach is best for you, ensure that your initial asset allocation investment strategy is appropriate for your risk tolerance and then commit to it, even in rocky times.
That's because employees are still letting stock allocations rise and fall with the market, rather than making a considered judgment about the proper allocation (given their age, assets and risk tolerance) between stocks and bonds and rebalancing accordingly.
Finally, though the calendar trends are interesting, your asset allocation strategies should be based on your financial goals and tolerance for risk, not what month or year it is.
Schwab's "Portfolio Checkup, " for instance, is an online asset allocation planner that's based on an investor's tolerance for risk.
This allocation should only change as your time horizon, goals, or risk tolerance changes.
The appropriate asset allocation should be tailored to your personal financial situation, accounting for your risk tolerance, time horizon, expected withdrawals, and legacy wishes, among other factors.
There are of course no guarantees on gains or preventing losses of your portfolio, but maintaining your preferred allocation can help spread the risks of your investments more in line with your risk tolerance and lower the levels of swings you might see in your account over time.
If you think your risk tolerance is higher or lower than the recommendation, you simply move the "risk dial" and adjust the allocation accordingly.
The appropriate asset allocation should be based on your goals (which include the time frame) as well as your risk tolerance and your risk capacity.
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