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What is asset allocation and why is it important?

April 26, 2017asset allocation

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What is asset allocation and why is it important?

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A. Asset allocation is the way your assets are divided between different types of investments. This process is undertaken to ensure the highest level of return for the least amount of risk. Asset allocation begins with finding your personal tolerance for risk; in other words how you react to changes in the value of your investments. A portfolio is then developed to reflect your personal risk level. Your portfolio of assets is monitored over the course of your investment time frame to measure and re-balance the mixture for optimum results.