Asset Allocation


Studies have found that, over the long run, how your investments are allocated is more valuable than individual investments, in determining overall performance for diversified portfolios.

That's right. It's not necessarily the particular investments you choose, but how those investments are allocated that may make the difference in reaching your financial goals.

Furthermore, the process of selecting an appropriate investment combination encourages you to organize your investments and consider your financial needs and risk tolerance, as well as other factors such as inflation, taxes, interest rates and the current economy.

Asset Allocation versus Diversification

On the surface, asset allocation may sound very similar to diversification. Indeed, the main beliefs are closely related; both are intended to reduce risk in your portfolio.

At its most basic, diversification means distributing money among several different investments.

By diversifying into a range of alternatives, you can lessen the chances of suffering a catastrophic loss should one of the investments perform poorly.

Asset allocation takes this belief one step further by diversifying your portfolio not just among different investments, but among different investment classes: stocks, fixed income alternatives such as bonds, cash equivalents, and real estate and other tangible assets.

Every investment involves some level of risk. Even CDs traditionally considered "secure" because, unlike other investment securities, they offer a fixed rate of return and are insured, carry the risk that the rate of return received may not be enough to outpace inflation and taxes. Given that some degree of investment risk is unavoidable, your goal should be to maintain, and ultimately increase, your investment returns while managing the risks.

Asset allocation does not eliminate risk, but it can reduce your exposure to extreme highs and lows in performance. Effective asset allocation can also help preserve capital, increase liquidity and decrease portfolio volatility.

It's Part of Putting You First

At Warren Wealth Management, we are dedicated to putting each client's financial well-being first.

That's why we listen. Only after listening to your needs and aspirations for the future can we recommend a tailored asset allocation plan.

Once we have a common understanding of your financial goals, the first step is to arrange your assets into four basic categories: stocks, fixed income, cash equivalents, and real estate and other tangible assets. This allows us to review your portfolio's current allocation in relation to your current needs and objectives, uncovering areas that might require special attention, including changes that may protect and strengthen the portfolio. The result is an overall picture created to help you achieve greater control over your investment plan. Furthermore, the asset organization process also allows us to provide a comprehensive listing of your current investments upon request. This list can be particularly useful for tax preparation, among other things.

The next step is to design an asset allocation model created specifically to help meet your individual needs. This model, when compared to your current allocation, can help identify possible shortcomings while providing an understanding of how they can be turned into strengths.

At this point, we will discuss potential adjustments to or restructuring of your portfolio to meet the boundaries established by your new asset allocation model.

Once we have designed and implemented a specific model, quarterly reviews help ensure that the portfolio is on track and present opportunities to discuss any changes that may be necessary.



Financial Planning

Asset Allocation
Education Funding
Estate Planning
Insurance Protection
Retirement Planning