THE INVESTMENT MIX
Having decided on your investing style and with an understanding of asset classes, you’re ready to determine the mix of assets you want to have in your portfolio.
This mix, known as “asset allocation,” is your expression of your personal risk tolerance and your desire to pursue your retirement goals. Ideally, your mix distributes investments across different asset classes to try to achieve the highest investment return at the level of risk you’re comfortable with. Many financial experts agree that having a mix of investments across asset classes is a good idea. (Asset allocation won't guarantee a profit or ensure against a loss, but may help reduce volatility in your portfolio. Diversification cannot ensure a profit or eliminate the risk of investment losses. Consider all investment information and your personal circumstances before making any allocation decisions. There are inherent risks to investing in securities products, including loss of principal.)
To help you get started, you can view the five common investment mix profiles:
For each investment style, the pie chart shows you:
- A sample asset mix
- The percentage of contribution for each asset class
These sample portfolios are not created specifically for you – and do not reflect your retirement goals or investment preferences. The ultimate allocation decision is up to you after you have considered investment information that pertains to your own personal circumstances. The specific asset allocations generated by Ibbotson and shown in these portfolios are based on well-known optimization techniques, using historical return, volatility and correlation data from indexes. Keep in mind, this optimization procedure is based on assumptions about historical market data, and future market conditions may vary from these assumptions. For help in determining your own mix, call TIAA-CREF at 800 842-2252.
Note: To see the asset classes that are available to you look at the Plans and Investments Choices offered by your employer.
Used with permission © 2012 Ibbotson Associates Inc. All rights reserved.