Diversification Across Asset Classes

Diversification Across Asset Classes

The core idea behind asset allocation is diversification. 미용기기 관련주

By investing in different asset classes, investors can reduce the impact of poor performance in any single asset class on the overall portfolio.

Matching Risk Tolerance and Investment Horizon

Asset allocation should align with the investor’s risk tolerance and investment horizon.

Those with higher risk tolerance and longer investment periods may lean more heavily toward stocks, which offer higher potential returns but more volatility.

Conversely, those nearing retirement or with lower risk tolerance may prefer bonds or cash equivalents, which provide lower returns but greater stability.