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Asset Allocation Loss Ratio (AALR) – What Is It & How Does It Help You?
Manage episode 405218664 series 3460431
Asset Allocation Loss Ratio (AALR) – What Is It & How Does It Help You?
When you go to any investment firm in Canada, they require you to sign a risk tolerance questionnaire to prevent you from investing too aggressively.
However there are two important questions:
What prevents you from investing too conservatively?
Can you achieve your life goals with more conservative investments?
These are critical questions, since almost nobody can retire comfortably with a typical balanced portfolio with 40-50% in bonds.
This is where the AALR comes in. With any financial decision, it’s important to understand how it affects your life – both the risk & the return.
The Asset Allocation Loss Ratio (AALR) estimates the effect of a more conservative portfolio or suboptimal asset allocation on your long-term investment returns.
In my latest podcast episode I give you examples of case studies, as well as the formula for asset allocation loss ratio, so you can determine exactly how you should invest for your future.
96 επεισόδια
Manage episode 405218664 series 3460431
Asset Allocation Loss Ratio (AALR) – What Is It & How Does It Help You?
When you go to any investment firm in Canada, they require you to sign a risk tolerance questionnaire to prevent you from investing too aggressively.
However there are two important questions:
What prevents you from investing too conservatively?
Can you achieve your life goals with more conservative investments?
These are critical questions, since almost nobody can retire comfortably with a typical balanced portfolio with 40-50% in bonds.
This is where the AALR comes in. With any financial decision, it’s important to understand how it affects your life – both the risk & the return.
The Asset Allocation Loss Ratio (AALR) estimates the effect of a more conservative portfolio or suboptimal asset allocation on your long-term investment returns.
In my latest podcast episode I give you examples of case studies, as well as the formula for asset allocation loss ratio, so you can determine exactly how you should invest for your future.
96 επεισόδια
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