The American Association of Individual Investors published an article on the free content portion of their site describing five lessons investors should be aware of when making their asset allocation decision. The entire article can be read clicking here.
The five lessons mentioned in the article are:
- Lesson One: Mixing bonds and stocks moderates portfolio risk.
- Lesson Two: Portfolio risk rises disproportionately slowly as stocks are added to the portfolio.
- Lesson Three: An all-bonds portfolio is not the lowest-risk portfolio.
- Lesson Five: An often-overlooked risk for the long-run investor is the risk of having a too-conservative portfolio.