Your portfolio should be tailored to your individual financial needs and risk tolerance, and flexible enough that it can be modified as your age and investment needs change. Click here for new clips from ABC News, CNN, Fox News, NBC and CBS that may effect the economy and the markets. These indexes are unmanaged. Investors cannot invest directly in indexes. All data delayed at least 20 minutes.
Diversification helps balance potential returns against risk.
This is where an investment selection process called asset allocation can help. Based on your current assets, spending needs, sources of income and long term objectives, asset allocation seeks to maximize your potential return for your given level of risk tolerance. As the potential return of an investment increases, so does the degree of risk involved. Asset allocation gives you a logical approach to investing. The theory is that your overall portfolio results are impacted by the away you diversify among asset classes rather than by the individual investments you choose.