Asset Allocation

User Generated

yoragvrm

Business Finance

Description

How would the asset allocation differ between a 25 year-old who is saving for retirement and a 67 year-old who is beginning retirement?

Be sure to provide the following:

  • Give a reasonable stock-to-bond ratio for each investor.
  • Explain your allocation.

Focus your discussion on the following:

  • Asset allocation
  • Time horizon
  • Ability to assume risk
  • Earning capacity
  • Income needs

Deliverable Length: 600–800 words

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Explanation & Answer

Attached.

Running head: ASSET ALLOCATION

1

Asset Allocation

Institutional Affiliation:

Date:

ASSET ALLOCATION

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The asset allocation between a 25-year-old investor who is saving for a retirement would
be different from a 67-year-old investor who is beginning retirement. Asset allocation is a
strategy of investment whereby an investor aims at balancing the rewards and the risk through
the adjustment of the percentage invested in the portfolio’s asset with respect to the investor’s
risk tolerance and the goals and time frame of the investment. It is important to note that there is
no set allocation by age which is perfectly correct but there is an asset allocation by age which
can be considered as the optimal. This is because the choice of an asset allocation depends on the
ability of the of the investor to assume risk, the income needs, earning capacity, and time horizon
among other factors which has to be conside...


Anonymous
I was struggling with this subject, and this helped me a ton!

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