Don’t put all your
eggs in one basket
Balancing Risk
Tchavdar Elenkov, BA Econ, CFP
Insurance and Financial Advisor
Agenda
 What is asset allocation?
 Can you pick the next winner?
 Factors to consider when choosing an
asset allocation strategy
 Next steps
What is asset
allocation?
WHAT
IS
ASSET
ALLOCATION?
Don’t put your eggs in one basket
 Allocating
investments
amongst
different types of
assets
Can you pick the
winner?
CAN
YOU
PICK
THE
WINNER?
No consistent asset class outperforms
CAN
YOU
PICK
THE
WINNER?
Which asset class is right for you?
 How much you
invest in each
asset class
depends on:
 Personality
 Financial goals
 Risk tolerance
CAN
YOU
PICK
THE
WINNER?
Where are you in the life spectrum?
Young investor
 Interested in maximum growth over the
long-term
Pre to Post-retirement investor
 Interested in protecting the wealth you
have worked so long and hard to
accumulate
Factors to
consider
FACTORS
TO
CONSIDER
Consider the following factors
Time Horizon
Risk Tolerance
Liquidity issues
Tax concerns
Legal constraints
Unique
circumstances
Investment
reporting
Next Steps
NEXT
STEPS
Step 1 – Visit your financial advisor
NEXT
STEPS
Step 2 – Create your own portfolio
 Choose an
investment with
an AA strategy
you can live with
OR
 Create your own
asset allocation
portfolio
NEXT
STEPS
Step 3 – Review your investments
 How much risk must I assume to achieve
reasonable growth?
 Is my strategy going to provide the
highest after-tax returns?
 Are the fund managers truly specialists
in the areas that they invest?
 Is the strategy congruent with my time
horizon(s)?
NEXT
STEPS
Step 4 – Rebalance your portfolio
 Regular portfolio
rebalancing
should be
undertaken
NEXT
STEPS
Step 5 – Remix your portfolio
 Re-run and
tweak your
portfolio models
NEXT
STEPS
Step 5 – Periodic reviews
 To determine if
changes in your
desired approach
are warranted
Things to
remember
THINGS
TO
REMEMBER
Talk to your advisor…
 …to determine if
there is an asset
allocation
strategy
appropriate to
you
THINGS
TO
REMEMBER
Consider pre-packaged funds…
 …for all or part
of your
investment
portfolio
THINGS
TO
REMEMBER
Consider implementing a rebalancing
strategy…
 …or investing in
asset allocation
portfolios from
providers that
offer automatic
re-balancing or
re-mixing
services
THINGS
TO
REMEMBER
Review your individual funds…
 …to make sure
you get what you
are expecting
 … to ensure that
someone is
“managing the
managers”
THINGS
TO
REMEMBER
Review your investment portfolio…
 …on a regular
basis to ensure it
is reflective of
your short term
and long-term
lifestyle goals