What is the primary goal of asset allocation?
Understand the Problem
The question is asking about the main purpose or aim of asset allocation in finance, which typically involves diversifying investments to manage risk and optimize returns.
Answer
Balance risks and rewards based on financial goals, risk tolerance, and investment horizon.
The primary goal of asset allocation is to balance risks and rewards based on an investor's financial goals, risk tolerance, and investment horizon.
Answer for screen readers
The primary goal of asset allocation is to balance risks and rewards based on an investor's financial goals, risk tolerance, and investment horizon.
More Information
Asset allocation helps investors diversify their portfolios, which can mitigate risks associated with market volatility. It is a fundamental strategy for long-term investment planning.
Tips
Focusing too heavily on one type of asset can increase risk, while spreading investments too thin may lower potential returns. Proper balance is key.
Sources
- Asset Allocation - Investopedia - investopedia.com
- What Is Asset Allocation? – Forbes Advisor - forbes.com
- Asset allocation - Wikipedia - en.wikipedia.org
