Re: Invisible Investing Risks: Inflation, Conservitism & Allocation
Agreed. Asset allocation reduces risk. And one issue not mentioned. TIME. Time reduces risk.
If you define risk as losing money, then TIME alleviates this more than any other factor. Starting to invest even modest amounts at young ages reduces the risk because time generally allows a stock investment to recapture it's lost value.
Asset allocation should include the following components:
Domestic Large Cap stocks
Domestic small cap stocks
International Large Cap stocks
and should consider
International small cap stocks
domestic bonds
International bonds
money markets/cash
real estate
and could consider
mid cap stocks
sector funds (energy, financial, tech, health care and the list goes on)
commodities (not something I do, but others do)
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