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8. Managing Your Portfolio > Asset Allocation: Less Risk on the Road to Returns

Asset Allocation: Less Risk on the Road to Returns

Allocating your money to different types of investments can reduce your investment risk while still producing gratifying investment returns.

You’ve no doubt heard the real estate adage, “Location, location, location.” In the financial world, asset allocation is to investing what location is to real estate, so the mantra on Wall Street is “Diversify, diversify, diversify.” To invest with success, define your investment goals and then use asset allocation to achieve those goals without losing any sleep. Savvy investors don’t try to keep pace with market averages or pursue trendy investment sectors. Instead, they assess the level of risk that makes sense for them, choose an asset allocation appropriate for their levels of risk and return, and stick with the plan. By focusing on the big picture, you too can work less and make better investments.


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