Invest in Yourself

What is good for an investor might not be good for the other. Let’s imagine that financial characteristics of 2 investors could be identical, but one of them could need a bigger margin from valuables in the money market in order to cancel medical invoices or some other need.

An asset allocation plan should be flexible enough to allow changes for personal and economic reasons. When market interest rates decrease, for example, a greater percentage of your portfolio could be allocated. Equally, when interest rates are up should assign more funds in equivalent valuables in the money market, and when condition become favorable you could allocate your money in stocks again.

After determining allocation in mix assets in a broad universe of investment categories (stocks, bonds, money market funds and other types of assets) the next step is to select individual investments and to assign amounts that will be allocated in each.

It would be very helpful to review the different stock categories. By allocating equal amounts of money in valued stocks, growth stocks, foreign stocks, blue-chip stocks and low capitalization stocks, for example, would reduce your portfolios total risk. The same process is applicable when dividing the total amount that will be assigned to bonds.

The following portfolio was chosen because of the following considerations:

  • High capitalization stocks instead of mid or low capitalization.
  • More emphasis in growth stocks than in valued stocks
  • US stocks instead of foreign stocks

You will notice the absence in this portfolio of low capitalization and foreign stocks, this is because they are more risky

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