In the investment universe there are a number of factors that are going to significantly impact upon your returns and ultimately the way in which you accumulate wealth.
I could speak all day on the various investment strategies one could use to generate returns but ultimately the biggest differentiator between the outcomes of various investors will be their asset allocation mix.
The decision of how much of your capital to allocate to the various asset classes can be debated until the end of time, however in my professional opinion, the optimal mix is one that is going to enable you to sleep soundly at night when markets are rough and will provide you with capital appreciation when markets are roaring.
This will be different for every investor and the easiest way to determine what asset allocation mixture is the most appropriate for you is through undertaking a detailed risk profile.
This will acknowledge not only your ability to absorb short term losses within your portfolio but also your understanding of investment markets. One crucial mistake that many investors make is that they invest heavily in complex opportunities that they do not understand.
For an investor whose main objective is significant capital growth and who is willing to accept large short term losses, their portfolio will consist of vastly different strategic exposures to equities, bonds and other investment classes when compared to a 70 year old retiree who is focused mainly on the preservation of their capital with some income to live off.
Understanding the maximum draw down that you are comfortable experiencing will enable you, as an astute investor to determine an asset mixture that is appropriate for your risk tolerance and will enable you to achieve your goals.
If you are interested in finding out what your risk profile is and the strategic asset allocations that are typically appropriate for an investor with your risk appetite, let us know and we will organise a consultation.
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