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(HawaiiNewsNow) - When it comes to investing, we've talked about the difficulties in trying to time the market as well as the benefits of proper asset allocation.
Asset allocation is an investment strategy that balances risk & reward · It adjusts percentage of each asset in portfolio according to risk tolerance, goals & time horizon of the investor. PA portfolio might consist of varying amounts of stocks, bonds, real estate, and cash. · When you properly diversify your investments you can mitigate some risk. Your aim is to adjust percentage of all those asset classes to provide optimal return based on risk tolerance. Those invested for long term will be more heavily weighted in equities and long term bonds. Those with shorter time horizon that are more risk averse, will have a larger allocation to short term bonds and cash Don't try to time the market by making frequent trades. It's recommended to take regular, disciplined reviews of portfolio. Make sure the risk is in alignment with your goals and time horizon · Reviews can be annually, semi-annually and should be regular, but not frequent. Most people finishing up or have finished filing taxes. If you're familiar with financial situation it might provide opportunity to invest tax return if you are receiving one. There has been some appreciation in stock market so good time to make sure balance of stocks & bonds meets target amount. A general rule to follow is when allocations drift by 5% or more from target, it's good time to rebalance back to the target. It's always good to have discussion with financial advisor to make sure balance of all assets meets risk tolerance, goals & time horizon of portfolio
Bank of Hawaii will be offering free seminars to the public throughout the year, for more information, click HERE!
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