Raise your had if you want an extra one quarter percent return on your portfolio every year? It takes about an hour and you can get this extra return every year. I know, it’s not much, but with interest rates in the basement, every little bit helps.
First, a bit of investing background.
What is Asset Allocation?
“Don’t put all of your eggs in one basket.”
This old adage describes the best way to boost investment returns. Diversify your investments among stock and bond index funds and you’ll cushion the volatility and boost returns. Imagine, over the last decade if you invested only stocks, your returns would have been in the low single digits. If you added some bonds to your portfolio, your investment returns go up a few percent.
Modern investing portfolio theory recommends determining your risk profile and then divvying up your portfolio in line with your risk level. In other words, if you can handle a bit more volatility in your investment returns, you want more stocks in your portfolio. Terrified of the cyclical ups and downs in your investment value, invest a greater percent in bonds.