One of the most significant personal finance decisions you’ll make is choosing investment allocations.
Alexandria Blaelock, author of Holistic Personal Finance: How to pay for the life you want says “Different assets do well in different kinds of economy, so it’s best to have a mix of real estate, stocks and bonds so when some are tanking, you have others picking up the slack.”
Here are Blaelock’s tips for choosing investment allocations:
- Consider your goals: Are you saving for a couple of years (e.g., a house deposit)? Or for a couple of decades (e.g., your kid’s college or your retirement fund)?
- Do you need income or growth: Are you looking for money to live off now? Or are you growing your savings for later?
- Your risk appetite: Are you prepared to risk your savings for higher returns? Or do you want to keep your capital safe with lower, possibly more reliable returns?
- Your virtues: Are there some industries (e.g., tobacco or nuclear) you don’t want to support? Are there some causes (e.g., carbon capture or aged care) that you do? Similarly, are there businesses (banks, insurance companies or brokers) that you do/don’t want to deal with?
- The time you can spend on it: Do you have the time and knowledge to monitor and adjust your investments? Would you prefer someone else to do the day to day work?
Alexandria’s tips on choosing investment allocations will help you pick the asset classes that best meet your needs.
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