Should You Change Your Asset Allocation Strategy Wholesale

Changing your asset allocation is a major decision and can be compared to changing careers. Accordingly, investors should not become emotional about their portfolios and change their asset allocation randomly. Prices can be a roller-coaster ride in the short-term, however in the long-term, markets tend provide returns in balance with the risks. There are several good reasons to change your asset allocation along life's journey. Those changes require deep thinking and an even handed judgment, and should not be made in a time of duress. Below are three reasons we believe a person has a legitimate reason to make an asset allocation change:1) Your target retirement goal is well within reach.2) You realize that you will not need all your money during your lifetime.3) You have realized that your tolerance for risk is not as high as you thought.Consider a reduction to risk when you are within reach of your financial goal. That is the time to take your foot off the gas pedal and move into the middle lane. For example, assume you wish to retire in 3 years with $2,000,000 in retirement savings. If you already have $1,800,000 in savings, the rate of return you need to achieve your goal doesn't require Wholesale Tablet PC a high risk allocation. It may be time to permanently lower your equity exposure because you no longer need to take as much risk. Second, a change to your allocation may be appropriate if you realize that you will not outlive your money. In that case, you are investing part of your portfolio for yourself and another part for the needs of those who will inherent your wealth. Your overall asset allocation should reflect the needs of both parties. Assume you have $2,000,000 in retirement savings. Your needs may be covered by $1,000,000 of amount and is allocated to 30 percent stock and 70 percent bond. The second $1,000,000 will be passed on to your heirs. Since heirs tend to be younger, they can be more aggressive. That portion receives a 70 percent stock and 30 percent bond allocation. Put together, an appropriate allocation for your Wholesale Flip Cell Phone portfolio is 50 percent stock and 50 percent bonds.The last reason to change an allocation is because you have taken on more risk than you can handle. If you are not sleeping at night because you are worried sick about your portfolio, and you are on the verge of making an emotional decision to SELL IT ALL! then reduce your equity position by 10 percent. Give that some time. If you are still having emotional reactions, reduce by another 10 percent. The portfolio has an appropriate level of risk when you are able to think clearly. Once you find this level Wholesale Tea Making of risk with your asset allocation strategy, stay there, even when the market recovers.