Follow Us: Google+
 
Bankrate.com

investing

Asset allocation for fund investors

An aggressive strategy for "Bold Betty"
Next
6 of 7
Back
text

Stocks aren't the only asset class to consider for investors interested in a growth-oriented portfolio.

The goal of an asset allocation strategy is to have a number of different asset classes with a low correlation to one another. Even if someone is diversified through the entire universe of equities, all can react similarly to a bad business cycle.

"You have to think about the underlying factors that they might be exposed to," says Farr.

Farr recommends that investors consider gold and Treasury securities when looking for assets that are not correlated with the stock market.

Both "would be a safe haven when the economy starts to do poorly. Or gold sometimes responds to concerns about inflation. Treasury securities ... are counter-cyclical in that when the economy gets weak, interest rates tend to decline and investors pursue safer assets," Farr says.

Heed this warning, though: In 2008, when the financial crisis unfolded and the stock market tanked, every asset class was adversely affected.

Since that's bound to happen from time to time, your investment plan should be based on the worst-case scenario while you hope for the best.


 

 

advertisement

            Connect with us
advertisement
Most Read
  1. Nick Nolte's house for sale
  2. 8 eerie ghost towns
  3. 5 best markets for home values
  4. What does a kitchen remodel entail?
  5. Don't sell a smelly house
  6. Headlight requirements by state
  7. 9 gas-only, fuel-efficient cars
  8. 8 affordable, classic cars for retirees
  9. 5 car models that lose value
  10. Top 10 states for foreclosure
CDs Overnight Averages
Product Yield +/- Last week
6 month CD
0.45% 0.43%
1 yr CD
0.67% 0.63%
5 yr CD
1.24% 1.24%
1 yr jumbo CD
0.65% 0.65%
Compare rates:
Don Taylorinvesting
When it comes to your investments, take time to understand that tricky lingo.
advertisement
Forget the flashy actively managed funds. For retirement, the Obamas use index funds.
Partner Center
advertisement

Advertising Disclosure: Bankrate.com is an independent, advertising-supported comparison service. Bankrate may be compensated in exchange for featured placement of certain sponsored products and services, or your clicking on links posted on this website.