Indeed, Thomas Idzorek summed up the studies by Roger Ibbotson and Morningstar, stating in a 2010 article, titled “Asset Allocation Is King,” that, “in aggregate, 100% of the return levels come from asset allocation.” A 1986 study by Gary Brinson is often misinterpreted, but the message is correct - investors need to pay attention to asset allocation. Finally, they may also have alternative-asset classes such as real estate, commodities, and private equity.Īdding complexity allows investors to add additional diversification to their portfolio, which may decrease the total risk of their investments.įor most people who are wisely trying not to time the market, widely quoted studies indicate that asset allocation is the most important decision investors make.
and international stock-asset classes and separate large- and small-company stock-asset classes. For example, many investors will have separate U.S. Investors may add complexity to the asset-allocation decision by adding additional asset classes or by breaking asset classes into subsets. Therefore, most investors would choose to diversify their investments with bonds which have historically provided less return (about 4.9% annual rate of return from 1928 to 2013), but with much less volatility. Most investors would want to protect themselves against that potential volatility, especially if they are in or near retirement. But, as we know, stocks are also volatile and may at times lose value. Stocks help an investment account grow over time and have averaged a 9.6% annual rate of return from 1928 to 2013 as measured by the S&P 500. With the run-up in stock prices, now is a good time to evaluate your existing asset allocation.Īt its simplest, asset allocation can be seen as the mix of stocks (partial ownership of companies) and bonds (a loan to be repaid at a specific time and interest rate). The appropriate asset allocation for you will depend on your goals, risk tolerance, and investment time horizon. Asset allocation helps investors maximize returns while minimizing risks by utilizing diversification as a strategy for managing different market conditions. But with high returns also comes the risk of volatility. With the S&P 500 stock index returning 31.9% in 2013, there is renewed interest by individual investors to invest in stocks. The second most important decision is your asset allocation. He is an avid hockey and lacrosse fan and is a season ticket holder of the Georgia Swarm.Doug WheatThe most important investing decision for individual investors is how much to save from your paycheck. In his personal life, Sean is a father of 3 and happily married to his wife of over 16 years.
He has received awards for being one of the top agents in his office for units sold and dollars sold. His office has nearly 300 agents and out-performs the local competition on a consistent basis. Sean is part of Keller Williams Realty - Atlanta Partners. Sean has experience in both up and down markets and enjoys helping buyers and sellers navigate the real estate industry in order to focus on the specific needs of his clients. This process included helping families relocate and preparing foreclosed homes for resale. He spent several years helping banks liquidate real estate owned properties. When the market turned in 2009, Sean gained experience with short-sale and foreclosure homes. Sean became a real estate agent in 2007 and held a record in his office for the highest first sale of $1,725,000. Sean started his real estate career in 2001 working in the Title & Escrow industry.
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