Where We Are

In January, we took A Quick Look Back.

Since we began this journey in 2017, we have covered the key investing concepts: risk and return; asset correlations and diversification; compound returns; core asset classes.

Understanding these concepts is the most important part of long-term investing success, yet the area most neglected.

In 2019, we have looked at how to create an investment portfolio to accumulate wealth. Not the actual buying and strategizing to this point. Rather, how your unique Investor Profile will be the catalyst for an appropriate target asset allocation. As you saw, your financial situation, investment objectives, and personal constraints, help determine your asset allocation. As does your phase in the life cycle, investment time horizon, and risk tolerance. Which is why your asset allocation should be unique to your circumstances.

Then we looked at target asset allocations. How diversification and asset correlations are key to building a portfolio. But to be vigilant, as correlations may shift over time. As well as how the three core asset classes fit into a portfolio. And how the risk-return profile within an asset class may differ significantly from the general risk-return of that class as a whole.

Finally, we considered how life cycle phase impacts asset allocations amongst cash equivalents, fixed income, and equities.

Over the next quarter or two, we will begin looking at issues relating to building your investment portfolio. The lump sum versus dollar cost averaging debate. As well, trading strategies. Should you be an active trader? Or should you just buy, throw the certificates in a lock box, and hold forever? Or somewhere in between? We will also revisit alternative ways to acquire new investments, such as Dividend Reinvestment Plans.

Should be an interesting upcoming quarter or more.