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Portfolios 105: Determining Your Asset Mix

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1.
Why is it hard to get consistent recommendations from different online asset allocation tools?
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They all use different assumptions. They all use different assumptions about inflation rates, earnings, and possibly taxes.
2.
Which is NOT a limitation of online asset allocation tools?
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They dont consider your time horizon. Most online asset allocation tools take your time horizon into account. They usually dont consider your tax situation, though. And all make different assumptions about things like inflation.
3.
Investment professionals say which of the following is more important?
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Your asset allocation. While selecting good funds or stocks is certainly important to meeting your goals, most investment professionals agree that asset allocation is even more important.
4.
If youre uncomfortable taking on more risk, what can you do to improve your chances of meeting your goals?
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Invest more each month and lengthen your time horizon. Neither investing more each month nor lengthening your time horizon increases your risk. But decreasing your exposure to bonds/cash increases your possible three-month loss.
5.
If you become more aggressive with your investments, which of the following is likely to occur?
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Your risk will increase. As you become more aggressive, your risk will increase.