This simple technique will save you a fortune if you apply it to your investments. We’re talking about asset allocation. Let us explain… Playing the markets means you must accept an ever present degree of uncertainty.
Stock picking and market timing, two important techniques to master if you want to make money by investing, come down to what is essentially guess work. Every day we “guess” what stock or security will rise or fall at a particular time. Great investors may be right 60% of the time. But the point is we can’t rely on being right; we can only trust our research and market insight.
This is where asset allocation, or portfolio management, comes in. Asset allocation allows us to minimize risk and maximize profits by rebalancing your portfolio. This means diversifying your investments across different asset classes.
According to our friends at Investment U, a smart way to effectively allocate your portfolio is to follow the model below.