Mixed Assets 6. Economic Conditions 7. Interest Rates 8. Allocation Plan 9. The way in which funds are allocated among various asset categories is the most important long-run determinant of the return on investment.
Different assets perform well during different economic periods.
For example, in the late 1970s and early 1980s, gold was a hot investment. During this period, when inflation was eroding the purchasing power of financial assets, gold was seen as an attractive physical asset to own. Since then, however, gold has generally been one of the weaker investment alternatives. Because an investor cannot perfectly anticipate when to move funds from one asset class to another, it is important to have a diversified approach to investing, one in which funds are continuously committed to a variety of assets. The information contained in this report may not be published, broadcast, rewritten or otherwise distributed without prior written consent from Standard Poor's.