5 Tips for Allocating Assets

Cullen Douglass Expert Header

According to Wikipedia, an asset, as it relates to finance, is an economic resource; it represents value of ownership that can be converted into cash. An asset is anything tangible or intangible that is capable of being owned or controlled to produce value and that is held to have positive economic value.

As retirement assets are accumulated over time, it’s important to determine how your assets will be invested.

In our continuing series on Biggest Financial Planning Mistakes, this week we focus on Mistake #8.

Mistake #8: Concentration of Wealth in One Asset Class

Allotting your retirement assets in one asset class is risky. “Everybody tends to put money into the hot, trendy thing,” says Cullen Douglass, a CERTIFIED FINANCIAL PLANNER™ with Douglass Financial Services in Cool Springs. “In 2014, Standard & Poor’s had a double digit return. But in 2008, it had a negative double-digit return. As the saying goes, ‘Don’t put all of your eggs in one basket,’” warns Douglass.

Examples of asset classes include Real Estate, Bonds, U.S. Large Capital Equities, U.S. Small Capital Equities, Commodities and Cash to name a few. “A solid portfolio needs to have investments in multiple asset classes,” says Douglass. “I prefer a portfolio to have nine different classes.”

5 Asset Allocation Tips:

  1. Invest for the Long-term – Be patient and ride the ups and downs of the market.
  2. Invest for Growth – Equity mutual funds (stocks) should play an integral role in your allocation. Stocks usually outperform all other types of investments while staying ahead of inflation. Think long-term.
  3. Know You – Understand and be comfortable with your risk tolerance level. Click here for last week’s article on this subject.
  4. Diversify Your Portfolio – This is what effective asset allocation is all about. Spread your assets among different asset classes and investment styles. This will help reduce your risk, and all of your eggs will NOT be in one basket.
  5. Annual Review – Once a year, review your asset allocations based on your life circumstances and long-term goals and make adjustments as needed.

“I work with clients to define their risk profile and determine, based on their financial plan, their portfolio,” explains Douglass.

To ensure your financial security for the long-term, begin now with the proper information and expert advice – from a CERTIFIED FINANCIAL PLANNER™. Cullen Douglass, CFP® and his team of professionals at Douglass Financial Services in Cool Springs has more than 60 years of combined industry experience.

Cullen Douglass, CFP® is a Wealth Management Advisor who focuses on complete planning including risk management, investments, estate planning, retirement planning and insurance. Douglass Financial specializes in comprehensive integrated financial planning, including:

  • Ÿ Personalized Financial Planning
  • Ÿ Investment Advisory; Products & Services
  • Ÿ Trust Services
  • Ÿ Wealth Protection & Risk Management

Just moved to Tennessee? Don’t delay in learning about Tennessee’s unique state laws. It’s not worth putting your spouse or children at risk. Cullen Douglass, CFP® & Douglass Financial Services can help you successfully navigate what can be murky waters.

Whatever your situation, if you have ten minutes, give Cullen Douglass, CFP® a call and take the first step in securing your family’s financial future. Douglass Financial Services is a division of Northwestern Mutual.

Click here to learn more about Cullen Douglass, CFP® and Douglass Financial Services.

To view our last article, Mistake #7: Not Managing Risk, click here.

Check with us next week when we discuss Mistake #9 in Biggest Financial Planning Mistakes.