Thread by @shdwinvestor

A quick thread on Asset Allocation

Asset Allocation is an essential component of anyone's investment journey!

Fancy translation; asset allocation is the breakdown of different investments in the categories known as asset classes. Stocks, bonds, cash are different asset classes.

Within each asset class, there are more breakdowns that categorize each investment like market capitalization, sectors, geographical locations etc. etc.

But in practicality, asset allocation is to diversify depending on an investor's risk tolerance.

Each asset class has anticipated risk and return based on historical averages.

Based on how much risk an investor is willing to take, a portfolio can be broken down within several categories to provide diversification and balance.

Conservative investors with a shorter time horizon can have less risky investments, while more aggressive investors with a longer time to invest can take more risk and potentially see higher returns.

ALWAYS move at your pace and your tolerance.

Within stocks, a sub-asset class could include large cap or small cap, and sectors like tech and industrial.

By diversifying and making sure different asset classes and sectors are included in their portfolio, investors seek to protect themselves from the impact of one company or sector or asset class.

Simple.

ShadowInvestor believes it's important for every investor to be diversified and have an asset allocation that aligns with their risk tolerance.

Shadow owns over 50 companies after investing for less than half a decade and consistently looks for more.

#asset #assets #assetallocation #financialfuture #stock #stocks #stockmarket #NFT #cryptocurrency #Housingmarket #Realestate #investing #invest #investingtips #ShadowInvestor

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