Everything You Need to Know About Asset Allocation: How to Balance Risk & Reward to Make it Work for Your Investments

Everything You Need to Know About Asset Allocation: How to Balance Risk & Reward to Make it Work for Your Investments

by Atlantic Publishing Group




Anyone who has ever managed to effectively invest enough money to become wealthy has done so through asset allocation — the effective means by which you place your money in a multitude of different channels to make sure no one failure would greatly affect you. This type of investment has rounded out many a portfolio, and the world’s wealthiest continue to keep their money invested in such a way.

This book guides you through the process of how this advanced investment technique works and what you need to do to reap the benefits. You will learn how to begin the planning process early and know what your goals are before you even start looking at your assets. You will learn how to understand the fundamental risks in every one of your investments and what they will mean for you.

The basics of asset allocation, from the simplest details to the most complex forms, are explained to ensure you understand where your money will be going. You will learn the ins and outs of multi-asset class investing, the framework for selecting investments, and the basics of equity investments, including U.S. and international equities. You will learn how fixed-income investments can be made and how to begin looking at real estate as a source of asset allocation.

Experts and practiced investors throughout the financial community have been interviewed and their insights compiled in this book to help you understand the basics of alternative investment, portfolio building, and successful management of risk and investment. You will learn who the top mutual fund providers are and be given lists of the top providers of advice, services, and information in the world of asset allocation. Your asset allocation needs, regardless of your financial situation, will be met with the information in this guide.

Atlantic Publishing is a small, independent publishing company based in Ocala, Florida. Founded over twenty years ago in the company president’s garage, Atlantic Publishing has grown to become a renowned resource for non-fiction books. Today, over 450 titles are in print covering subjects such as small business, healthy living, management, finance, careers, and real estate. Atlantic Publishing prides itself on producing award winning, high-quality manuals that give readers up-to-date, pertinent information, real-world examples, and case studies with expert advice. Every book has resources, contact information, and web sites of the products or companies discussed.

This Atlantic Publishing eBook was professionally written, edited, fact checked, proofed and designed. The print version of this book is 290 pages and you receive exactly the same content. Over the years our books have won dozens of book awards for content, cover design and interior design including the prestigious Benjamin Franklin award for excellence in publishing. We are proud of the high quality of our books and hope you will enjoy this eBook version.

Product Details

ISBN-13: 9781601383228
Publisher: Atlantic Publishing Company FL
Publication date: 07/21/2014
Pages: 288
Product dimensions: 6.00(w) x 8.00(h) x 0.08(d)

Table of Contents

Introduction 13

Chapter 1 Why Asset Allocation? 15

Key to Asset Allocation 20

Allocation vs. Diversification 23

Investment Evolution 26

Income Statement Factors 29

Balance Sheet Factors 31

Factors Off the Balance Sheet 32

Case Study: Asset Allocation: Imperative to Investor Success 34

Individual Investors versus Professional Investors 37

Chapter 2 Risk 41

Case Study: The Benefits of Asset Allocation 44

Risk-free Investing 47

How Much Risk? 49

Individual's Risk 52

Volatility Losses 53

Chapter 3 Stocks 59

Domestic Equities 61

The IPO 62

Analysis 64

Stock indices 72

Stock Mutual Funds 76

International Investments 78

Chapter 4 Bonds 83

What is a Bond? 84

Government bonds 87

Corporate bonds 88

Bond mutual funds 90

Case Study: Focusing on Long-term Returns 93

Other fixed-income investments 95

Chapter 5 Alternative Investments 103

Residential Real Estate 104

Commercial Real Estate 105

Real Estate Investment Trusts 107

Commodities 108

Exchange Traded Funds 111

Case Study: Determining Your Tolerance for Risk 113

Derivatives 118

Futures 119

Options 123

Contracts for difference and spread betting 125

Hedge Funds 128

Collectibles 133

Chapter 6 The Makings of Asset Allocation 137

Diversification 139

Case Study: Adhering to a Game Plan 143

Portfolio Selection 149

Modern Portfolio Theory 151

Risk versus Reward 153

Chapter 7 Asset Allocation in Practice 161

Principles of Choice 161

Investor Behavior 169

Strategies 174

Style of Asset Allocation 178

Chapter 8 Setting up an Investment Portfolio 187

Limiting Factors 188

Case Study: Dispersing Your Risk 191

Long-term Goals 193

Security Selection 202

Annuities 210

Chapter 9 How Are You Doing? 213

Case Study: Asset Allocation: The Most Important Aspect of Investing 218

Rebalancing 223

How it works 226

Advantages and disadvantages 227

When to rebalance 228

How to rebalance 230

Dealing with Life Events 231

Chapter 10 Fees and Taxes 235

Fees 235

Taxes: Asset Location 240

Types of account 244

Chapter 11 Professional Advice 251

Qualifications 253

Case Study: Maximize Return while Reducing Risk 255

Interrogations 258

Conclusion 261

Appendix A Risk Tolerance Questionnaire 263

Glossary of Terms 267

Bibliography 281

Author Biography 283

Index 285

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