Asset allocation is the phrase used by financial professionals and might sound fancy – but all it is – is a spread of investments.
When I place a persons investment money into funds, it’s common sense that you don’t put them all in the one area. Say for example I was investing £100,000, then I would invariably use 10 funds, and I would not put all this money into 10 different UK equity funds – that’s the old saying about putting all your eggs into the one basket.
What I would do for this person is pick a range of areas and types so that you get a spread of areas and if bad news hits one area, then it will only affect any investments in that area but not everything. Let me give you an example of what I would do today –
LOW RISK FUNDS
MIDDLE RISK FUNDS
HIGH RISK FUNDS
Asset allocation means that you allocate your assets to a wide range of possibilities, and if one fund fails – then it doesn’t bring the house down. The only way to do logical investing is to do such a spread AND to continually keep your eyes on things as everything will always CHANGE.
All you need to do on an ongoing basis is ensure that you always have a spread of areas, types of funds etc – so that you can capture the good areas and minimise losses. There is nothing scientific about it – just plain old common sense.
What we do at MAP is invest a clients money and then monitor this at regular intervals and if economic conditions change and a fund starts to lose money or even go down in value, then we contact the client and change it. In our opinion this is the ONLY way to invest money. What would you rather have ?
1. Somebody carefully watching over what you invest in and adapting it to current conditions OR
2. Put money into an investment and then walk away and do sweet nothing
I know which one I would do – and that is what MAP DOES.
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