Asset Allocation

The book I read to research this post was Asset Allocation For Dummies by Jerry A Miccolis et al which is an excellent book which I read at

http://safaribooksonline.com

The idea of asset allocation is diversifying your investments to minimize risk and at the same time maximize the potential of what you can make. You obviously shouldn't invest everything in the same investment and equally in the same type of investment. Also you don't want your investments maturing at the same time to avoid paying loads of tax. You should arrange things ideally over a 10 year period so that a little matures each year and obviously one exception to that is you may want a lot of your investments to mature when you retire and bear in mind you could be alive for a further 25 years so if you don't have private pensions you need a lot to maintain a reasonable standard of life. In the book they rate Exchange Traded Funds or ETF's higher than stocks and shares and risk endured should be proportional to potential gain. A certain portion of your wealth can be invested in a tangible investment like real estate or something like antiques, bear in mind with the latter it's a very fickle market & certainly if someone values something at a certain price it might get a lot less at an auction. The home you live in like the car you drive shouldn't be regarded as an investment unless you intend to sell it at a profit at a later date. They usually call these kinds of costs a use investment in that you are buying them to use. This book is aimed at the American market but the general advice is sound & I thoroughly enjoyed reading it.