Asset Allocation | What You Need To Know

Asset allocation is one of the most important concepts in investing. In this video, we'll define asset allocation, discuss the benefits and risks of various asset classes, and provide some tips on how to create an effective asset allocation for your portfolio.

Timecodes

0:00 - Intro
0:31 - Diversification vs. Asset Allocation
1:46 - Why Is Asset Category Important?
3:11 - Real World Consequences
3:39 - Age & Risk
4:02 - Bonds - Counterweight to Stocks
4:37 - Who Needs Bonds?
5:29 - Typical Asset Allocations By Age
6:30 - Some Examples for Different Asset Allocation
8:20 - We Change, So Will Our Asset Allocation

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DISCLAIMER: I am not a financial adviser. These videos are for educational and entertainment purposes only. I am merely sharing my personal opinion. Please seek professional help when needed.

[okaydamian]

I started my 100k portfolio last year with SCHD, VOO, and VUG after watching one of your videos. In terms of share price, VOO is up! and VUG is doing even better. This year, I've tried to add some more assets but unfortunately facing a decline. Do you advise I consult an advisor?

[JakeSpradlin]

For me, I’ll be 100% stocks until about 10 years til retirement, then I will start adding bonds/cash

[johngill]

You're good, I'm giving you credit you really are hitting the nail on the head with most of the stuff

[lakaja]

Love your stuff man. I’ve really started to think farther ahead in life and set my family up for success with your no nonsense or pie in the sky advice

[jnordman]

9:00 One thought I have on this is go ahead and put money in bond funds in a Roth IRA while you find what your allocation mix should be so the money is growing and compiling then you can actively rebalance the portfolio with additional contributions...this lets you play it safe while the money is working. Also at this time, if you have a company run 401-k...let them run it until your ready. They generally have at least basic advisors that will put you in a cookie cutter plan especially around open enrollment.

[emil]

I like your content. In India, we consider investing in gold, either in physical gold bar or as gold ETFs.

[CraigBarrettEsquire]

I am 50 years old don't plan on retiring for at least 20 years (I love my career as a corporate attorney) and my wife and I live well below our means, saving 60-70% of our income. My asset allocation is pretty aggressive: 35% S&P index ETF (SPY); 35% percent in large cap managed fund; 10% in tech heavy fund (QQQx); 5% invested in REITS, 5% SP weighted utilities ETF; 5% Vanguard total US Bond fund (BND) 2.5 invested in Gold; (GLD); and 2.5% invested in Bank-loan portfolio. so that is 80% Equities, 5% REITs, 7.5% debt instruments, and 2.5% in gold.

[Kimberly___zb]

Optimistically, fantastic news – the confirmation of your Sales Incentive payment has been processed!

[ChadAdkins-hxzz]

You due great work Tae and your communication skills are awesome...I've been investing for 18 years and it took a long time but 1 simple index fund and putting all my resources in it has worked best for me and gave me the highest returns.

[MountainManFred]

Great vid again! Under the asset allocation umbrella, if you did one for people who have social security and maybe a pension..that may be good info as well... Thanks!

[FortuneCookieLies]

The all weather strategy works due to at least one of the 4 having a good year and the idea is that the allocations are risk parity so you are going in and basically looking at when to rebalance and it is once or twice a year but at least 1 or 2 of those will go up then. I think we might see a strong year for TIPS if I had to guess. I think that the cuts will need to be assessed but growth wasn't sacrificed for beating inflation which is rare.

[CommonSenseAintCommon]

In order to invest in stocks profitably, you have to know how to read a chart(technical analysis) and also know what makes a good company(fundamental analysis)

learn those 2 and you'll start making money...if you take it seriously it'll take any where from 1-5 years..

[eRockBrowser]

Cool video. I would add the diversification is a double edged sword. If you cut the pizza into a lot of small slices you have downside protection but you also cap your upside potential.

[mikeweller]

Asset allocation only makes sense if you understand all the risks. For example, changing interest rates which are closely tied to inflation risks. When interest rates are low and falling, bonds grow slowly but stocks increase rapidly (e.g. 2010 - 2021). When interest rates increased rapidly due to inflation, stocks dropped rapidly, but so did bonds. So much for bonds and stocks moving in opposition to each other. Bonds do well in a falling interest rate environment like the 1979 - ~2000 time frame. At other times, not so well. There are at least 12 risks I have identified, and most don't move in the same direction as the other risks. If you don't understand your risks, you often have the wrong asset allocations.

[tduval]

Hi Tae! Do you think it's better to choose an accumulation ETF or a distribution ETF? Thanks for your answer...

[jyotisman]

Hi, im 53 year old and have allocated my funds between a growth index fund like SPY and a dividend fund like SCHD at ratio of 50: 50. im using the strategy of dollar cost averaging by allocation 3k every month between these 2 ETFs. Can you please advise if the allocation should change based on factors like high interest rates, overvalued market etc? Is this something I need to pay attention to every month prior to allocation? So if the market is overvalued or the interest rates have just been raised, should the allocation change to more of debt and dividend ETFs compared to growth ones like SPY or VOO?

[jameshollingsworth]

Another great informative investment video... Also believe dividend funds like VYM and VIG are an important mix in one's portfolio.

[phillyboylaboy]

thank you the information. I am 59 and looking to retire next year. I have like 70/30 allocation. the 30 is not in bonds but in tbills and money market fund(spaxx) combined. when bonds are mentioned is that the same as saying fixed income sources like CDs, tbills, hysa, and mmfs?

[azbob]

if you have a lot of money stock make even more sence i mean 25 millino in stock just the divident is like 300k never even have to sel

[terrylee]

How would you invest in 2022 with inflation, interest rate and stock market "bubble" concerns?