Asset Allocation
Distributing funds among asset classes (stocks, bonds, cash) to meet objectives.
Detailed Description
Asset Allocation
What is the primary goal of asset allocation?
The primary goal of asset allocation is to optimize the balance between risk and return based on an investor's goals, risk tolerance, and investment horizon.
How does asset allocation help manage risk?
Asset allocation helps manage risk by diversifying investments across various asset classes, thereby mitigating the adverse effects of market fluctuations.
What are the main types of asset allocation?
The main types of asset allocation are strategic, tactical, dynamic, and constant weighting.
Why is rebalancing important in asset allocation?
Rebalancing is important because it realigns the proportions of assets in a portfolio to maintain the desired risk-return profile as market conditions change.
What factors influence asset allocation decisions?
Factors influencing asset allocation include investment goals, time horizon, risk tolerance, market conditions, and tax considerations.