For a portfolio to be effective it must be built on a solid foundation. What’s a solid foundation? It’s a combination of your needs and decision making style, paired with asset classes that are relevant to what you are trying to accomplish. If you get this part right, you can eliminate the vast majority of investment products on offer in the marketplace and focus on a short, manageable list.
The studies I've seen, and there are many, agree that the way assets are allocated in a portfolio has the largest impact on portfolio returns. That's what we will address in this lesson.
There are more than 40 recognized asset classes to choose from. That’s too many. This lesson will show you how to winnow down this list to just the ones that are relevant for what you are trying to accomplish.
We have the building blocks, and now its time to choose which ones belong in your portfolio
Once you have settled on a broad asset allocation foundation, it's time to choose among the thousands of investment vehicles that will represent each of your asset classes. That may sound like a daunting task, but you only have to do it once... right now. After that it will become a matter of making minor adjustments around the edges.
Take this quiz and find out if you're ready to move on, or go back and review one or more of the lessons.
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