Deciding where to save and invest your money can often be a confusing jumble of unfamiliar terms, contradictory news stories in the media, lots of advice from acquaintances and even guesswork. It really doesn’t have to be that way. If you know your saving and investment goals, and know how aggressive you would like your strategies to be, a professional financial advisor can help you develop a portfolio based on “asset allocation.”

What Is Asset Allocation?
The theory behind asset allocation is much more sophisticated than simple diversification and, in fact, the concepts of asset allocation and Modern Portfolio Theory earned the 1990 Nobel Prize in Economics.

Asset allocation relies on complex mathematical models to optimize the risk/reward ratio of your investment portfolio through investment among various types of asset classes (such as long-term growth, international fixed income, high yield, etc.). Since different types of asset classes do not always go up in price or down in price at the same time, the result is a more stable growth pattern from your portfolio.

How Are Assets Allocated?
How your money is allocated can be tailored to your needs, based on long- and short-term goals such as saving for a vacation, a new car, college or retirement. These goals, along with the amount of investment risk you are willing to take, are all a part of sound financial planning.

Nearly everyone who uses the asset allocation model will find that traditional savings plays at least some part in their investment portfolio. Savings options, such as a daily savings account and certificate accounts, give you the advantage of having predictable growth with essentially no risk, since accounts at such institutions as the Fairwinds Credit Union are Federally insured.

Uninsured investments, such as mutual funds and stocks, are not insured by any Federal agency and, thus, these investments carry some risk. You need to let your financial advisor know how much risk you are willing to take versus the potential returns and this will be factored into your asset allocation analysis.

How Do I Start?
If you would like an asset allocation analysis, contact one of our representatives at Fairwinds Financial Services at (407) 282-6039 or have one contact you. The analysis is free and you won’t receive any sales pressure — just good advice in plain English.