November 17
This week, I spoke about asset allocation and how you shouldn’t “put all your eggs in one basket.” In other words, you should diversify and invest in stocks, certificate of deposits, bonds and other assets rather than just invest in stocks which can result in you losing all your money. If you diversify, even if one investment brings you losses, other investments can bring you profits. The class analyzed an example and determined the appropriate asset allocation for an individual. Some of the determinants of where this individual should allocate his assets were liquidity, age, tolerance and uniqueness. We allocated based on three categories- aggressive, moderate and conservative. Aggressive meant that this investor was only interested in earning high profits and did not mind taking a high risk, moderate meant that this investor was interested in a moderate return and moderate risk and conservative meant that this investor was interested in a low return and no risk. The students were engaged in the lesson. I look forward to next week’s lesson.
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