FIN 352: Investments I - Professor Dow
Part I. Investing Basics
Topic 4. Asset Allocation
Deciding how to allocate your wealth across different types of assets is one of the most important investment decisions you’ll make. This topic teaches you how to make that decision.
Reading: The SEC's Beginner's Guide to Asset Allocation
Reading: My Notes on Asset Allocation
Lecture: Asset Allocation (in class)
Assignment 5: Investing Goals and Risk Tolerance.
Assignment 6: Asset Allocation: The Allocation
Assignment 7: Asset Allocation: Choosing Mutual Funds
Here is a simple quiz that evaluates your attitude towards risk. This is a replacement quiz for assignment 5.
Quiz about attitudes towards risk
Here are some websites the offer simple rules about asset allocation
"Lazy" Asset Allocation
American Association of Individual Investors (AAII) on Asset Allocation
An asset allocator is a software program that takes basic financial information about a person and then recommends an asset allocation. The programs will differ by how much information they require and how detailed their recommendations are. Here are three allocators (in order of increasing complexity). You will use the first one in assignment 6.
Asset Allocator-Iowa Public Employees' Retirement System
One complication is determining which assets should be counted in your investment portfolio. Here is AAII's take on that.
What Assets Count
Some mutual fund companies offer "life cycle funds" that invest in both stocks and bonds in a ratio "appropriate" for your age. Here is AAII's discussion of those funds
AAII on Life-Cycle Funds
And here are Fidelity's version of those funds.
Fidelity Mutual Funds
Click on "Freedom Funds" to see their different funds. Also click on "Learn more..." to learn more.
So far we have been discussing asset allocation in the context of mutual funds; however, you can also use EFT's (or individual stocks and bonds for that matter)
Using ETFs for Asset Allocation