Sunday, May 11, 2014

Why Asset Allocation is vital, and isn’t complete without non-Wall Street assets

You have done this before, it was probably at your company 401k  meeting.  There is a questionnaire that probes your timeline for needing to spend your long-term savings money, how you would feel about losing some of your money, and how risk tolerant you would be if the market was swinging up and down.

The answers to those questions help the brokerage form an investment blue-print.
That blue-print suggested spreading your “eggs” into many different mutual fund “baskets.”  The idea is to balance out the overall risk to your investment by spreading the opportunities into assets that perform well in differing market cycles.  When one is up, it balances the performance of another investment that isn’t doing well at the time.

Some funds that focus on foreign investment, some funds that buy small company stocks, some funds that buy big, established “blue chip” stocks.  Some funds focus on precious metals or real estate holdings or different kinds of bonds.

But the point is, every one of those is still a “fund.”  It is all subject to the emotions of the stock investor and the countless exterior forces that make the market move.  Stocks of profitable companies will lose just because a sector is doing poorly.

We believe that to have your portfolio truly diversified, some of those dollars need to be separated from Wall Street’s influence.  We believe that there is power and peace of mind in owning tangible assets that aren’t tied to Wall Street.  We love the cash flow that comes from rental real estate ownership or private real estate lending.  We like the peace that comes from owning a payment stream from the US government or a big, strong insurance company.  Cash in the mailbox provides options for retiring or reinvesting.

We have non-Wall Street assets that still reflect tangible ownership with cash flow.
How much of your portfolio should be separated?  That is up to you.


Let’s walk through this 5 minute questionnaire and find out:

1 comment:

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