aGuidetoAssetAllocation

aGuidetoAssetAllocation - A Guide to Asset Allocation...

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Unformatted text preview: A Guide to Asset Allocation Allocation Mentor You should consider the investment objectives, risks, charges, and expenses of the investment options offered through a retirement plan carefully before investing. The prospectuses/fund fact sheets containing this and other information can be obtained by contacting your ING Registered Representative. Please read all information carefully before investing. 1 How Important Is Asset Allocation? How important is asset allocation in meeting your financial goals? According to the landmark study Determinants of Portfolio Performance II, An Update, published in 1996 by Brinson, Hood, Singer, and Beebower, the largest single factor in performance representing 91.5% of a portfolios total return was the asset allocation decision. Choosing how much a portfolio should hold in any type of asset, rather than focusing on market timing or choosing particular stocks, is vital. This guide has been developed to help you determine your risk tolerance and personal investment strategy by using asset allocation. Asset allocation is a personal investment process through which you determine how to invest your money among different asset classes such as stocks, bonds, and money market instruments (i.e. cash and cash equivalents). By putting your eggs in different baskets, the assets in an investment that is performing well may protect against the assets at risk in an investment that is underperforming. Asset allocation will help you diversify your assets by keeping these three key elementsyour time horizon, risk tolerance, and liquidity needsin mind. Other factors to consider are return expectations, personal asset class preferences, and present or future tax implications. Asset allocation is a process that may help you achieve your investment goals by diversifying your assets. Remember, however, that simply owning vast numbers of investments does not necessarily make you diversified. Asset Allocation The model portfolios described on the Financial Risk Profile questionnaire and corresponding Worksheet are based on widely held investment theories that asset allocation is a key factor in achieving investment objectives, and a long holding period for investments helps to reduce risk. Each portfolio considers the historic rates of return of different asset classes over long periods of time, although past performance is no guarantee of future returns. A model may show an allocation of up to six different asset classes, which are represented by generally accepted market indices. The past performance returns and risk (measured by standard deviation) of each index for the past 25 years (if available) are used as a basis for the portfolios. Market indices are unmanaged and the returns of these indices reflect reinvestment of dividends or other distributions. They are not available for direct investment....
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aGuidetoAssetAllocation - A Guide to Asset Allocation...

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