Building Wealth by Hitting the Asset Allocation Sweet Spot


Some people think asset allocation is relatively simple. Just set your percentages and wait.

Unfortunately, finding your sweet spot isn't quite that easy.

When it comes to allocation, the devil is in the details. No matter how deep you go, it seems like there's more fine-tuning to do. There are levels galore.

For the average wealth builder, it can seem a bit overwhelming.

It doesn't have to be. Asset allocation is vitally important. It's a critical factor in the ultimate failure or success of your investment strategy.

Yet it isn't exactly rocket science. By undertaking a thorough investigation of your financial position and motives, you can find numbers that work for you.

Still, it's a tough calculation. It's also something you're going to have to revisit frequently.

Your asset allocation sweet spot is dynamic, not static. It's an ever-moving target. What makes sense for you at 30 is suboptimal at 55.

So let's take a closer look at the voodoo behind proper asset allocation.

Before we do, let's examine the most critical allocation decision you'll need to negotiate -- appetite for risk.

The problem of risk

Chet Simmons was at the top of his game. A high-powered television executive, he had risen to become the first president of NBC sports. He had helped that network gain the broadcast rights to the NFL, NBA and MLB.

He landed the Olympics. He was instrumental in creating instant replay on television. He was at the pinnacle of his profession.

Then he risked it all on a longshot.

Compared to NBC, his new network was small potatoes. A totally unknown cable startup. They wouldn't have the chance to broadcast Wimbledon or the Super Bowl. Simmons' new channel was stuck with slow-pitch softball games.

While the programming wasn't riveting, Simmons did something smart. He hired a crew of anchors with outsized personalities. Guys like Chris Berman, Bryant Gumbel and Bob Ley.

That tactic paid huge ...

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