Reference Library

Investment Planning

Asset Allocation

Asset allocation is diversifying your money among different kinds of investments. It is an important way to help offset volatility among your investments and, therefore, to help manage the risk of your portfolio.

In other words, when one type of investment is performing well, another type may not be doing as well. The difference in this performance can be due to a range of circumstances, such as political, economic or industry issues. To even out the effects of the different performance results of each asset in the portfolio and help provide for less volatile investment performance across an entire investment portfolio, many investors allocate their portfolio among different asset classes, or types of investments.

Your Lincoln Investment financial advisor can guide you through the many factors involved in your asset allocation decision. This process should include a discussion about the risk-reward relationship of investing, which means the higher the potential return from a particular kind of investment, the higher the potential risk.

Your Lincoln Investment financial advisor will consider how much risk you are comfortable with and will look at your financial situation and objectives to assess the kind of investment return you should seek.

Based on this information, your Lincoln Investment financial advisor can help you determine your "investor profile," or where you fall in the risk-reward investment spectrum. This spectrum ranges from conservative to aggressive with several categories in between.