Allocating your assets can be a hassle, confusing and downright difficult. However, like any difficult task, an easy solution emerges when you lay it out in a simple step-by-step process. If you play your cards right, you could help reduce risk and create balance through the allocation of your assets.

1. Build up your Cash Savings

Before you can invest or continue to invest in other assets, make sure you save enough money first. This money will be used for emergency situations that could and most likely will happen down the road. Saving 3-6 months of living expenses is a good rule of thumb to use.

A 5 Step Plan to Allocate Your Assets

You want to save money first, rather than invest first because investing is along term goal, whereas cash savings are meant for times in between where you might need money to get through hardships or emergencies. The last thing you want to do is pull money from your investments to pay for something that your savings should have covered.

2. Plan with Bands of Time

Many people think that no matter what you’re investing in is a good thing, as long as you’re diversifying your assets. However, those who rely solely on diversity aren’t thinking enough about their investment strategies.It’s important to diversify your assets into bands of time – have a 1-5 year investment, 6-10 investment and 10+ year investment. Additionally, invest each tranche of money differently and not into one basket…

3. Diversify your Baskets

You have heard it before and you’ll hear it again; don’t put all of your eggs in one basket. If you truly want to diversify your assets, invest in different outlets to make sure you are truly diversified in the shorter and longer terms. The key here is to branch out so your investments don’t become stagnant or not to risk losing the basket with all of your eggs in it.

4. Take the Risk

It’s instinctive to be overprotective of our money and to only place it into guaranteed investments, so we can have safe returns. However, don’t be afraid to free yourself from the safe havens of investing and take a risk every now and then. Consider challenging your level on risk and place your money with less probable success, yet yield high returns. Not to say safe investing isn’t bad because it certainly is, but true diversity comes with some risk, as well.

5. Use Non-correlated Assets

You’ve saved money, planned with bands of time, diversified your eggs and baskets, and taken some risk along the way. The final step to a truly diversified allocation of assets is to utilize non-correlated assets. When some of your investments don’t relate to each other, this results in a greater diversification of assets.Own distinctly different assets and I guess you could say you’re diversifying your “eggs”, as well.

Gregory M. Reed is a Certified Financial Planner (CFP®), who works with Raymond James Financial Services, Inc., and is a member of FINRA and SIPC.

You can find him at 3201 S. Providence Road, Ste. 102 in Columbia, Mo 65203 or contact him at 573-777-1934. Visit for more information on financial planning.

The information contained in this report does not purport to be a complete description of thesecurities, markets, or developments referred to in this material. Any information is not a complete summary or statement of all available data necessary for making an investment decision and does not constitute a recommendation. Any opinions are those of Gregory M. Reed, CFP®  and not necessarily those of RJFS or Raymond James.

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