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    How Asset Allocation Can Help You Achieve Your Financial Goals
    How Asset Allocation Can Help You Achieve Your Financial Goals
    How Asset Allocation Can Help You Achieve Your Financial Goals
    Ebook40 pages40 minutes

    How Asset Allocation Can Help You Achieve Your Financial Goals

    By Dale Maley

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    About this ebook

    As a child, your mother probably told you not to put all your eggs into one basket. Asset allocation uses the same basic principle. This story story explores the definition of asset allocation and how you can use it to help achieve your financial goals.

    LanguageEnglish
    PublisherDale Maley
    Release dateJul 10, 2010
    ISBN9781452349275
    How Asset Allocation Can Help You Achieve Your Financial Goals
    Author

    Dale Maley

    Dale C. Maley is the author of the 19999 book Index Mutual Funds: How to Simplify Your Financial Life and Beat the Pros.He is also a contributing author to Chapter 18 Seeking Help from Professionals in the 2009 book The Bogleheads Guide to Retirement Planning.He is a very successful private investor who has been a student of Financial Planning and Investing for over 30 years. He was trained as an engineer at the University of Illinois and has been a practicing engineer for 32 years. His accomplishments as an engineer include the granting of 16 U.S. Patents and authorship of over 500 professional technical papers. He is also a member of the International Society of Automotive Engineers and the Society of Manufacturing Engineers.He also has earned an MBA (Masters Degree in Business Administration) degree from Illinois State University. His background in mathematics, engineering, and business provides him with the excellent basis for understanding and teaching investments and financial planning.He is also a very successful investor who has been investing in common stocks and mutual funds since 1980. He has also personally invested in both 401(K) and IRA plans, so he is familiar with participation and management of these types of investments. He has been investing in indexed common stock mutual funds since 1990.Dale became a Registered Financial Advisor in the State of Illinois in 2006 and is currently launching his business as a fee-only financial planner. He is President of Maley Financial Planning LLC.

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      Book preview

      How Asset Allocation Can Help You Achieve Your Financial Goals - Dale Maley

      How Asset Allocation Can Help You Achieve Your Financial Goals

      by

      Dale C. Maley

      SMASHWORDS EDITION

      * * * * *

      PUBLISHED BY:

      Artephius Publishing on Smashwords

      How Asset Allocation Can Help You Achieve Your Financial Goals

      Copyright © 2008 by Dale C. Maley

      All rights reserved. Without limiting the rights under copyright reserved above, no part of this publication may be reproduced, stored in or introduced into a retrieval system, or transmitted, in any form, or by any means (electronic, mechanical, photocopying, recording, or otherwise) without the prior written permission of both the copyright owner and the above publisher of this book.

      Q: What areas of investing have you been exploring since the publication of your book Index Mutual Funds: How to Simplify Your Financial Life and Beat the Pros?

      A: The last few years  I have been exploring the field of asset allocation. I have found asset allocation to be a fascinating area involving not only financial principles, but human psychology as well.

      Q: What is the background and history of asset allocation?

      A: Asset allocation is often defined as the methodology used to construct an investment portfolio made up of various asset classes. Funds are allocated to these asset classes to give the desired levels of risk and return the investor seeks. A simpler definition would be to diversify your investments so you don’t put all your eggs in one basket.

      We can thank two men for developing most of the principles behind modern asset allocation practices. In 1952, Harry Markowitz wrote a 14-page paper titled Portfolio Selection[1]. His key finding was the risk of an investment portfolio can be controlled by properly diversifying the investments in the portfolio. Markowitz continued his research and eventually won a Nobel Prize for his efforts.[2]

      In 1986, Gary Brinson published a paper which found that 93.6% of a portfolio’s return is determined by asset allocation.[3] This was a revolutionary finding in the world of finance. It meant asset allocation was much more important than which individual stocks or bonds you selected for your portfolio. It also demonstrated that market timing was not an important factor.

      The tough part about applying asset allocation is the

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