Allocation With Amida Wealth

Asset allocation is the implementation of an investment strategy that attempts to balance risk versus reward by adjusting the percentage of each asset in an investment portfolio. At Amida Wealth we encourage you to think about overarching allocation of wealth in a holistic manner across all our assets. Sometimes we need to take a step back to see the bigger picture (like a beautiful painting). Money, or rather our investments and life assets are no different. Allocation works at any level regardless of the size of the investment. A good strategist such as Sun Tzu would say “Know your enemy and know yourself and you will have no fear.” At Amida Wealth we learn your risk tolerance and understand your goals. We move beyond the typical by identifying all of your opportunities. Our strength is in our resources, all custom designed to help you build a portfolio that does the most good with your investment dollars while minimizing risk.

How Asset Allocation Works

This is the same concept to managing investment risk. Under this approach, investors divide their money among different asset classes, such as stocks, bonds, and cash alternatives, like money market accounts. These asset classes have different risk profiles and potential returns. The idea behind asset allocation is to offset any losses from one class with gains in another. In addition, reduce the overall risk of the portfolio. It’s important to remember that asset allocation is an approach to help manage investment risk. It does not guarantee against investment loss. When you asset allocate/invest, be present to what value system you have and apply it when possible. You are not always able to do it with all investments but if anything, take a sliver and ensure that you are investing in things that have value to you. 

Determine The Most Appropriate Mix

The most appropriate asset allocation will depend on an individual’s situation. Among other considerations, it may be determined by two broad factors.

1. Time. Investors with longer timeframes may be comfortable with investments that offer higher potential returns, but also carry a higher risk. A longer timeframe may allow individuals to ride out the market’s ups and downs. An investor with a shorter timeframe may need to consider market volatility when evaluating various investment choices.
2. Risk tolerance. An investor with higher risk tolerance may be more willing to accept greater market volatility in the pursuit of potential returns. An investor with a lower risk tolerance may be willing to forgo some potential return in favor of investments that attempt to limit price swings.

Allocation is a critical building block of investment portfolio creation. In other words, having a strong knowledge of the concept may help you when considering which investments may be appropriate for your long-term strategy.

Strategies for Asset Allocation

In asset allocation, there is no fixed rule on how an investor may invest and each financial advisor follows a different approach.

• In Age-based Asset Allocation the investment decision is based on the age of the investors.
• For Life-cycle funds Asset Allocation or targeted-date, investors maximize their return on investment (ROI) based on factors such as their investment goals, their risk tolerance, and their age.
• Constant-Weight Asset Allocation strategy is based on the buy-and-hold policy. That is, if a stock loses value, investors buy more of it.
• Tactical Asset Allocation strategy addresses the challenges that result from strategic asset allocation relating to the long-run investment policies.
• Insured Asset Allocation is the ideal strategy to adopt. It involves setting a base asset value from which the portfolio should not drop.
• Dynamic Asset Allocation is the most popular type of investment strategy. It enables investors to adjust their investment proportion based on the highs and lows of the market and the gains and losses in the economy.

Amida Wealth Family Conversations

At your next family or friends gathering encourage the topic of asset allocation. Have your loved ones considered this topic? Is this a matter they have thought about for their future? Do you know what asset allocation is? Encourage the ones you love to read this blog and learn more about how asset allocation could greatly enhance their lives. Do they view their assets in a holistic way? Encourage them to stay focused and connected to themselves, their goals, and their vision.

Final Thoughts

In conclusion, we should think about our overarching allocation of wealth in a holistic manner across all our assets. None of us are prepared at a very young age to know what money is. We only see the material assets it brings us. Money is part of the puzzle that we must solve in order to understand our vision of wealth. First it is essential to uncover where your  money is going and what tools you need to manage this flow and start to save more. Only then can you take the next steps towards financial strength. Allocation is our way of saying you must budget intelligently. How you allocate your money so that your present is enjoyed and your future is taken care of.