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April 4, 2021 8:11 AM newsfeedback@fool.com (Diane Mtetwa)
Posted:
Updated:
April 6, 2021 8:12 AM
Your asset allocation is your personal mix of stocks, bonds, and cash. But the way that you invest is more than just a colorful pie chart, and can be the deciding factor in how successfully you meet your goals.
That’s why assessing your risk tolerance and picking an asset allocation model is so important. And it’s one of the first things you should do before you invest, for these three reasons.
Image source: Getty Images.
1. Your asset allocation affects how much you have to invest
Your asset allocation could impact how much you’ll contribute to your accounts every year. And the more you can potentially earn in investment return, the less you’ll need each year.