Asset Allocation and Investment Strategy Services for Clients Served from Syracuse
The financial professionals at HighPoint Advisors, LLC provide asset allocation, investment strategy advice, and other services to help investors and employees nationally as well as in the Syracuse area build their nest egg. Our goal is a financially secure future for all our clients.
Asset allocation is the process of implementing an investment strategy that adheres to the investor’s risk tolerance, timeline, and financial goals. The key to asset allocation is balancing risk versus reward to pursue the best possible return on the client’s investment. Diversifying the types of investments in the portfolio may reduce the overall risk of losing money since each type of account should perform differently.
There is no guarantee that a diversified portfolio will enhance overall returns or outperform a non-diversified portfolio. Diversification and asset allocation do not protect against market risk.
Classes of Assets
The four basic classes of assets used in investment portfolios are stocks, bonds, cash, and alternatives assets.
- Stocks: Stocks can be the most volatile option, but they can also provide a higher return than other investment vehicles. Stocks are commonly used for long-term investing as they tend to appreciate over full market cycles.
- Bonds: Bond values rise and fall in correlation with interest rates. They can be less volatile than stocks, but they sometimes offer a lower rate of return. Bonds offer fixed interest payments at regular intervals as well as the return of par value at maturity.
- Cash alternatives: These are the least volatile investment option, but they offer the lowest growth rate. They’re often used for short-term investments, but because they are subject to inflation, there’s a chance the returns won’t outpace rising prices.
- Alternative Assets/Strategies: This category may include assets such as Real Estate Investment Trusts (REIT), Master Limited Partnerships (MLP), Business Development Companies (BDC), Managed Futures, Commodities, Currencies, and/or Annuities.
Your asset allocation strategy will depend on your risk tolerance, investment timeframe, and financial goals. There are four types of strategies to consider:
- Strategic Asset Allocation: Used for long-term investing, the goal is to create a diverse mix of assets that will optimally balance risk and return over full market cycles.
- Tactical Asset Allocation: The goal is to find a balance of investment vehicles that demonstrate the greatest promise for gains in any given market environment. This involves active management and sometimes may require a higher level of risk tolerance than strategic asset allocation.
- Core-Satellite Asset Allocation: This is a mix between strategic and tactical asset allocation, so the investor includes both conservative assets and riskier investments in his portfolio. The core of the portfolio tends to be more strategic, whereas the portfolio satellites tend to be managed in a tactical way.
- Systematic Asset Allocation: This strategy makes three assumptions. First, it assumes the market provides explicit, detailed information about available returns. Second, it assumes that the relative expected return rates indicate market consensus. Finally, it assumes that the expected rate of return will provide clues to the actual rate of return.
Investing involves risk including loss of principal. No strategy including asset allocation assures success or protects against loss. Tactical allocation may involve more frequent buying and selling of assets and will tend to generate higher transaction costs. Investors should consider tax consequences of moving positions more frequently.
Your financial advisor will help you determine which investment strategy is right for your situation. Whether your goal is to save for retirement or to start a college fund for your children, we’ll analyze your financial situation to create your personalized investment recommendation, which will include specific investments for your portfolio. Once you’ve settled on the initial allocation strategy, we’ll work with you to rebalance your portfolio to seek returns.
Syracuse investors, as well as investors in other areas looking for help with their asset allocation and investment strategy, have trusted HighPoint Advisors, LLC for years. Call us today to schedule a consultation!
Securities offered through LPL Financial, Member FINRA/SPIC. Investment advice offered through Private Advisor Group, a registered investment advisor. Private Advisor Group and HighPoint advisors, LLC are separate entities from LPL Financial.