Asset Mix - Why It's Your Most Important Investment Decision

It has been demonstrated by business and academic studies over many years: asset mix is the primary factor behind investment success.

Consider the characteristics of the main asset types: growth (stocks), income (bonds) and safety (cash). With stocks, you can experience short-term volatility. Although riskier, stocks historically outperform the other asset classes. With bonds, you have security of principal in the long term, but price fluctuations in the short term, though usually less so than with stocks. With cash, you have security of principal but generally a low yield or rate of return.

The problem is, you can never tell which asset class will outperform at any given point because you can’t predict what financial markets will do. What you can do is limit your exposure to any one asset class through a balanced approach to investing. And that’s what asset mix is really all about.

Controlling Risk through Diversification
Balanced investing is the financial equivalent of putting your eggs in more than one basket. The greater the variety of investments you have, the less you are likely to be hurt by the poor performance of a single fund. Because investment markets move independently—and unpredictably—a balanced approach also increases the likelihood that at least part of your portfolio is always performing better than the others.

How Do I Know What To Invest In?
Building a portfolio appropriate for your personal goals is easy thanks to TD’s Wealth Allocation Model*. This easy-to-use guide can help determine the right investments in the right proportions for you. The Wealth Allocation Model is included with this brochure and also available on the TDQC website at www.tdqc.com. Take a few moments to answer a few simple questions and watch the Wealth Allocation Model create a customized portfolio for you.

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