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Asset Allocation For Dummies® by Jerry A. Miccolis, Dorianne Perrucci

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Chapter 1. Understanding Asset Allocation

Psst! Want to know the trick to making a killing in investments? One that offers fat financial returns with little or no risk? Sadly (and as you'd probably guess), there's no such thing.

Want to know how you can score great long-term investment results while minimizing unnecessary risk and costs? In that case, you've come to the right place! With the right asset allocation, you can enjoy substantial investment returns with the lowest possible amounts of risk and cost.

Asset allocation, in simplest terms, is deciding how to divvy up your investment dollars among various types of assets. More fully, it's a comprehensive, coherent, top-down, strategic approach to investing that has well-established science and years of real-life superior investment results to back it up. In other words, it's bona fide, and when it comes to investing, nothing consistently beats it.

In this chapter (and throughout this book), we show you how and why asset allocation works and, perhaps more important, how it can work for you. We take you step by step through the time-tested approach to investing that the most successful professionals use. We explain how you can reap the benefits of rebalancing, which is the closest thing to a free lunch you'll ...

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