ASSET ALLOCATION TO MEET YOUR FINANCIAL GOAL

understanding asset allocation

when you allocate assets, you’re dividing to conquer

An investment asset is something of value that you can use to help meet your financial goals.

For example, if you buy stock in a corporation, your stock is an asset. If the stock increases in value over time, you can either sell it for more than you paid for it, or you can hold it in your portfolio to increase your net worth. If the stock pays dividends, you can either spend the money or use it to make more investments, whether in the same stock or in something else.

Of course, assets don’t always behave the way you expect. Stocks may cut their dividends rather than raise them, especially in tough economic times. And some stocks lose rather than gain value, either in the short term or over the long haul.

Besides stocks there are many asset categories, called asset classes, which produce gains and losses in different ways and react differently to changes in the financial markets.

investing with a purpose

the opportunity to meet your goals is the greatest incentive for making informed investing decisions

Like most people, you’re probably investing to achieve some specific financial goals. Your list may include some, though probably not all, of the common objectives that many people share:

• Enjoying a comfortable retirement

• Paying for your children’s college education

• Buying a vacation home

• Building a business

• Traveling around the world

• Endowing a chair at your alma mater

• Providing financial security for your parents

• Enriching your heirs

And you may have some ambitions that are uniquely yours.

The bottom line is that most people can’t afford to pay for everything they want to accomplish with the income they earn. That’s why investment income is essential.