7 tips for the right asset allocation when investing

Choosing the asset allocation can be a challenging task. But it is the most important part of investing. Asset allocation is the amount you invest in various classes of assets like stocks, real estate, bonds and cash. Here are some tips you should keep in mind regarding asset allocation.

  • You get higher expected returns from high-risk assets. These risks can result in sharp declines in portfolio value instead of gains. As the level of risk and return on investment is directly related, it is important to create your balance to take a risk and with your ability to withstand the fluctuating market.
  • If you are young, then you have many years of compounding in future, so your risk is low. But your size of the portfolio is probably small, and so you have to go a long way to reach your retirement goals. So, young people often want to take a high risk to accumulate a fund for their retirement.
  • If you are closer to retirement and you, think that you have not saved enough money. Then you will be opted to take higher risks to get higher returns. On the other hand, if you have achieved your financial goals, you need to take less risk.
  • According to academic research, you shouldn’t withdraw more than 4% of your portfolio value every year in retirement if you want to have your portfolio last over a 30-year retirement.
  • The ability of a person to take risk depends on the person’s personal tolerance for withstanding a down market without feeling any stress.
  • The worst thing to do is selling in the face of a market decline. This could result in a permanent loss.


  • You should keep in mind the following rules of thumb:

If you are 40 years old, you should use a 60/40 (equity/bond) allocation.

Consider 110 minus your age in equities. That is, if you are 40 years old, then 110-40 years old = 70/30 (equity/bond) asset allocation.

Consider 120 minus your age in equities. That is, 120-40 years od = 80/20 (equity/bond allocation).

Research shows that asset allocation is responsible for more than 90% of portfolio returns. So, it is more important than particular fund selection.

What factors should you consider when financing investment property?

In the recent years, home prices have been increasing at a constant rate. Many people still think whether it’s a good to invest in the real estate market or not. Low-interest rates are still attracting the buyers. But limited inventory is increasing the prices of properties in the desired locations. If you want to invest in the property market, then you should consider the following factors.

Have a sizable down payment

The mortgage insurance doesn’t cover investment properties. You need at least 20% down payment to secure financing. If you can provide a 25% down payment, then you can qualify for a better interest rate. If you cannot afford the down payment, you have to try to get a second mortgage on the property.

Be a good borrower

The loan-to-value ratio and the policies of the lender can influence the terms of a loan on the investment property. Before investing in a property, it is essential to check your credit score. It will have a high impact on a loan’s terms.

Avoid big banks

If your down payment is not that big, then you should visit a neighborhood bank for financing instead of going to a big bank. The small banks will be more flexible. They also know the local market well and would be more interested in investing locally. You can also go to mortgage brokers as they have access to various loan products.

Think outside the box

If you want to invest in a property that has a high chance of profit, then consider securing a down payment. You can also choose home equity lines of credit, insurance policies or credit cards.


For the actual purchase of the property, you can get private loans. You must always research your investment well before moving to riskier sources of money.