The Truth About Asset Allocation

Asset allocation is one of those “buzz phrases” that has been used by financial planners for a long time to help keep their clients feeling warm and fuzzy in inside. ¬†Coupled with the phrase portfolio diversification, asset allocation was all a planner needed to say to gain the trust of a prospective client. Well unless if you’ve been living in a cave for the past two years you know that times have changed and all those people who clung to traditional financial planning (including asset allocation and diversification) are currently wondering what happened to all their money.

Looking a little deeper into the practice of asset allocation we can see the inherent flaw. Asset allocation models are typically designed after the fact. To prove my point take a look at 90 percent of the current traditional portfolios and you will not find gold and other precious medals anywhere. why? Because 5 to 10 years ago it made no sense to have gold or precious medals in your portfolio, but obviously that has changed. Now as traditional planners create diversified portfolios they will be including gold and hoping that over the next decade it continues to grow and doesn’t lose ground.

Crystal Ball For Sale

Really the only way you can win when dealing in the stock market is to literally have a crystal ball that tells you the future. I’ve been searching around for a while and haven’t run across one, there are always new stock jocks that pop up during bear markets but where are they now? ¬† A new tradition in financial planning and wealth management has surfaced as a smarter, more financially savvy generation rises. It no longer makes sense to put hard earned money at risk. Safe, risk free, tax free, consistent, controllable, liquid, these are all words that describe the ideal financial tool. Have any idea where you can find all those characteristics in one tool? ¬† The answer might surprise you. It’s time to stop losing money!

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By Josh | Follow Josh on Twitter