When I’m building a portfolio of investments with clients, we’ll take into consideration the past performance of different funds or the taxes that come with them. But the primary driver of the long-term return on a portfolio is in what asset classes its investing. Stocks, bonds, and cash savings are all different types of asset classes and tend to bring with them differing levels of risk and return. Once we work out the financial goals that make sense for my clients, I help them decide what mix of stocks and bonds will keep them on track towards those goals. The goals and plan come first, then we decide the investments and there are plenty from which to choose. We know how these different asset classes have performed in the past and we use that knowledge to pick a mix of them that we believe will help get us to our goals. If you would like to talk further about what mix of assets might be right for you, contact me. I’d be happy to help you. Please look at the rest of the information on my blog, too, and watch my other videos to learn more about becoming an educated investor.
DISCLOSURE: Past performance is not indicative of future results. Investing involves risk and the potential to lose principal. Asset allocation is an investment strategy that can help manage risk within your portfolio but it does not guarantee profits or protect against loss in declining markets.