Planning should reduce risk: Part I
Enter asset allocation. Asset allocation is how you divide your money among various investments. The way you mix investments determines the overall level of risk in the portfolio.
With the right mix, you can control portfolio volatility to a certain extent. You also have some control over the level of returns. Higher-risk investments generally offer higher returns; lower risk equals lower returns.
“There are ways to invest so that you are not going to suffer the large loss when we have another 2008 scenario,” says CFP professional Matthew Tuttle, CEO of Tuttle Tactical Management in Riverside, Connecticut.
All stocks are not equally risky, and all bonds are not equally safe.
Planning should reduce risk: Part II