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Asset Allocation DeMystified by Paul Lim

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chapter 4

Establishing a Strategic Plan

In establishing a strategic investment plan, you must first consider the factors that determine your basic allocation.

Your Age

Just as with anything in life, there is a cycle to your asset allocation strategy—only this one might seem a tad contrarian. For instance, some may assume that because a 20-something has decades of time in which to build his or her nest egg, he or she can afford to take a slow-and-steady approach that is dominated by conservative investments such as fixed income that grow much slower than stocks.

By contrast, one might assume that an older worker who is just 5 or 10 years away from retirement but who is falling short of reaching his or her goals may want to boost exposure to ...

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