Developing an Asset Allocation Strategy in smart investing (continued...)

• Tolerance of Risk is important for smart investing asset allocation

How would you react if your investment portfolio suddenly dropped 10% in a bear market? What about 20% or more?

If, by realistically anticipating your emotional reactions during tough investment times, you can come to terms with risky before you fact it, you will be better able to resist making rash moves during the stock market 's inevitable downturns. Investing smart means invest in investment vehicles that are best suited for your risk tolerance level. Consequently, your asset allocation strategies in smart investing will only consist of investments that suit your risk tolerance levels.

Smart investing means if you are a conservative investor, you have a conservative asset allocation model portfolio. That means if you will lie awake all night because your investment portfolio dropped 10%, then you should have a conservative asset allocation for your smart investing. On the other hand, if you can handle the ups and downs of the stock market because you believe in your asset allocation strategy and asset allocation model, then you can have more aggressive investment asset allocation model.

• Expectations of Return is key to developing an asset allocation strategy

Your targeted investment returns should be realistic in light of historical performance trends, the current market environment, as well of course, as your attitude about risk. Smart investing does not mean getting the best return on your investment. Smart investing means investing in the most suitable investment vehicles. Consequently, smart investing means having the right asset allocation strategy and asset allocation model in order to achieve your investment goals.

Like all Business and Investment plans, your Asset Allocation strategy should not be set in stone. Whenever your goals change or investment climate have shifted, you may need to adjust your Asset Allocation plan to make sure that you are still on tract to achieve your goals.

Asset Allocation cannot guarantee results and past performance is no guarantee of future performance. However, having a sound, well thought out asset allocation strategy is essential for smart investing to help you reach your long term goals.