Asset Allocation in Syracuse and Central New York
Making the most of your portfolio takes planning. From locating investments to gauging risk and reward, asset allocation plays a big part in managing a balanced portfolio. At HighPoint Advisors, LLC, we help clients throughout the Syracuse area and Central New York region find investment strategies that best suit their needs. Discover how allocation and diversification play out in your overall investment strategy1.
Allocation vs. Diversification
Asset allocation and portfolio diversification are key to managing risk vs. reward. While asset allocation refers to the percentage of each asset class you hold in your portfolio, diversification refers to the different types of assets in your portfolio. There is no way to fully eliminate risk, but allocating and diversifying help create a well-balanced portfolio that performs efficiently.
Types of asset allocation strategies include:
- Strategic asset allocation: A long-term investment strategy used to create a mix of assets that balance out over full market cycles.
- Tactical asset allocation: Locating a balance of investments that have the potential for the most gains under any market condition.
- Core-satellite asset allocation: A blend of strategic and tactical allocation, this strategy achieves a balanced blend of risky and conservative choices.
- Systematic asset allocation: This strategy is based on trends and market signals. It assumes the market is clear about available returns, relative return rates indicate market consensus, and expected return rates provide clues to actual return rates2.
Making Investment Choices
When it comes to investing, it’s important to take your timeline, risk tolerance, and financial goals into account. For example, asset allocation in retirement planning will vary based on how far away retirement is for you and how much you’ll need to save beforehand. As you get closer to retirement, your portfolio should reflect choices with less risk potential in an effort to help maximize the wealth you’ve accumulated over the years. Assets are broken down into four basic classes:
Stocks
An investment in a company, stocks are securities sold by corporations to help fund their businesses. Individual stocks are called “shares.” When your stock price appreciates, you can sell it for a profit. If your stock pays dividends (not all do), payments are made to you, the shareholder. Stocks frequently fluctuate, making them a highly volatile choice and more appropriate for long-term strategies3.
Bonds
A bond can be thought of as a loan to a corporation or government from investors. Funds are used to pay for business operations, and investors are paid in interest based on a fixed or variable rate. While less volatile than stocks, bonds often come with a lower rate of return. They can be used to help balance out riskier investment choices in your portfolio4.
Cash Alternatives
Just as the term sounds, cash alternatives are assets that are substitutes for holding money in your wallet or checking account (CDs, U.S. treasury bills, money market accounts). They offer a low-risk, low-return choice for your portfolio5.
Strengthen Your Investment Strategy with a Professional
At HighPoint Advisors, LLC, we can help you create a customized portfolio built on sound asset allocation strategies. Contact us today to learn more about the services we bring to clients across the Syracuse area and Central New York region.
1There is no guarantee that a diversified portfolio will enhance overall returns or outperform a non-diversified portfolio. Diversification and/or asset allocation does not protect against market risk.
2There is no guarantee that a diversified portfolio will enhance overall returns or outperform a non-diversified portfolio. Diversification and/or asset allocation does not protect against market risk. Tactical allocation may involve more frequent buying and selling of assets and will tend to generate higher transaction cost. Investors should consider the tax consequences of moving positions more frequently.
3Stock investing includes risks, including fluctuating prices and loss of principal. Dividend payments are not guaranteed and may be reduced or eliminated at any time by the company.
4Bonds are subject to market and interest rate risk if sold prior to maturity. Bond values will decline as interest rates rise and bonds are subject to availability and change in price.
5CDs are FDIC insured to specific limits and offer a fixed rate of return if held to maturity, whereas investing in securities is subject to market risk including loss of principal. Treasury bills are guaranteed by the US government as to the timely payment of principal and interest and, if held to maturity, offer a fixed rate of return and fixed principal value.
An investment in the Fund is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency. Although the Fund seeks to preserve the value of your investment at $1.00 per share, it is possible to lose money by investing in the Fund. Per SEC rule 482(b)(5) prospectus language must be in a type size at least as large as, and a style different from (eg. Italicized or bolded) as that used in a major portion of the materials.
All investing involves risk including loss of principal. No strategy assures success or protects against loss. There is no guarantee that a diversified portfolio will enhance overall returns or outperform a non-diversified portfolio. Diversification and/or asset allocation does not protect against market risk.