Asset allocation is a key strategy in managing investment risk and pursuing investment objectives over time. Done correctly, asset allocation is the process of dividing a portfolio among a selection of core asset classes to balance risk with long-term growth potential.
At Solidarity Wealth, we employ strategic asset allocation in managing our clients’ portfolios. Take a moment to watch this video to understand why asset allocation is critical to investment success and how Solidarity Wealth can help you pursue your investment goals with confidence.
Transcript
Introduction: Danny Clark on Asset Allocation Strategies
Hi, I’m Danny Clark, a Certified Private Wealth Advisor® with Solidarity Wealth. Today I’m here to talk about asset allocation. Asset allocation is a critical investment management tool that can be a primary factor in whether investment objectives are met.
Why Asset Allocation Is Key to Long-Term Investment Success
Properly utilized alongside investment discipline and financial planning, asset allocation helps mitigate risk in a portfolio and drive investment performance over the long term. Let’s discuss how we employ asset allocation in managing a client’s wealth and why this method is important for your financial success.
The Difference Between Asset Allocation and Diversification
You’ve probably heard the term diversification and its importance to investing. But while diversification is indeed a critical component of investing, there’s a difference between it and asset allocation. Both concepts involve spreading risk, but asset allocation is assigning the percentage of your investments among different asset classes like stocks, bonds, cash, and others.
Going Beyond Stocks, Bonds, and Cash in Asset Allocation
There are many theories and methods used in asset allocation, but it’s not a one-size-fits-all strategy. Many people believe the only asset classes are stocks, bonds, and cash. While these are the main classes, there are others such as real estate or private equity that can help with spreading risk and enhancing return.
Factors to Consider in Building an Asset Allocation Strategy
Asset allocation is more than just picking a percentage based on age or risk tolerance. While these are useful criteria, other factors are equally important in selecting the proper investment mix for a portfolio, such as future objectives, lifestyle, income needs, and job or retirement status.
Personalized Asset Allocation for Your Financial Goals
For our clients, asset allocation and how we manage investments is a highly personal endeavor based upon the client’s needs and much more. Along with assigning appropriate allocations, having the right liquidity for a client’s income or other needs is crucial.
The Role of Liquidity in Investment Planning
We understand the need for having the right mix of liquid investments, such as short-term liquid investments paired with longer-term ones that can be left to achieve potentially better returns. This comes from listening and helping clients articulate what’s important to them, both now and in the future.
Building a Financial Plan as the Foundation for Asset Allocation
We believe building a financial plan first for a client is key to understanding their goals, risk tolerance, and investment areas where they are confident in investing their money. We dive into learning each client’s preferences and objectives.
Adjusting Asset Allocation to Life Changes and Market Shifts
Even so, we know life happens and markets change, so we continually work with clients to assess changes in their lives and in the financial markets to help them feel confident their portfolios are aligned with shifting objectives.
Discover How Solidarity Wealth Can Help You Achieve Financial Success
I hope this discussion has been useful and informative. At Solidarity Wealth, our mission is to support our clients with objective advice consistent with their values so they can live life to the fullest. If you’d like to learn more about how we can help clients experience financial success, please contact us for a complimentary consultation by emailing info@SolidarityWealth.com or calling 385-374-1665.
Solidarity Wealth is a registered investment adviser. This material is solely for informational purposes. Advisory services are only offered to clients or prospective clients where Solidarity Wealth and its representatives are properly licensed or exempt from licensure. Past performance is no guarantee of future returns. Investing involves risk and possible loss of principal capital. No advice may be rendered by Solidarity Wealth unless a client service agreement is in place.