Asset Allocation: The Basic Investing Mixes You Need To Know

One of the most common questions we hear is, “Which investment should I choose?”

Our answer is this: Consider a diversified investment like Conservative, Moderate, or Aggressive Mix.

Think about these three investments like they’re classic cocktails.

Take for example, a martini. Sure it’s a little on the dry side, but you can come back to it time and time again because you just can’t beat a classic.

What kind of cocktail do you like? We’re mixing and serving them up to you fresh. We’ve got three different recipes: Conservative, Moderate, and Aggressive Mix. Learn more about the mixes, and choose one that reflects your investing goals.

Start by reading the ingredients.

The mixes are like classics, designed to provide broad exposure to different asset classes and geographies according to your risk appetite. Each of the mixes are ‘allocation funds’. These provide exposure to a broad mix of global stocks, bonds, and cash, which make up the three classic ingredients.

This investment includes a mix of stocks from the US, Europe, and Asia. There’s a blend of small and large companies across many different industries, including the stocks of each of the 500 largest public companies in the US.*.

The investments also include three different bond funds: IUSB, CRED and GOVT*.  Bonds, especially those issued by investment grade institutions such as governments and large corporations, are traditionally regarded as stable investments.

What’s the difference between these three mixes?

All three of the funds have the same top 10 holdings. The difference is asset allocation. That’s a fancy way of saying a certain ratio or weighting of investments or ingredients. When you’re building your classic investing cocktail, choose the ratio that suits your taste and appetite for risk.

Taste? Ratio? Why does that matter?

Investing is about balancing the sweet taste of reward with the bitter reality of risk.  As the risk profile increases, you generally have the potential for higher returns and a greater risk of loss. By sticking with a lower risk investment you are targeting slower, steadier growth. Stocks have historically been more volatile than investment-grade bonds, and are generally considered to be higher risk investments.

Take a look at asset allocation in action:

Conservative Mix has the highest percentage of bonds out of all three.

asset allocation

Bonds are generally lower risk, lower reward. That makes this conservative.

Moderate Mix has a more balanced ratio of stocks to bonds.

asset allocation

Increasing the risk a little bit, to increase the potential reward.

Aggressive Mix is more heavily weighted toward stocks.

asset allocation

Higher risk, higher potential for reward.

It’s time to order off the menu. Tell me the surgeon’s general warning!

We believe that you should choose just one Mix level that reflects your risk profile and investment goals, rather than invest in all three. This is an investment you can start on Auto-Stash to automatically invest according to your desired schedule and, in the process, take advantage of Dollar-Cost Averaging. Don’t stress about whether the prices go up or down a little from one day to the next. Just keep investing, and hold them for the long term.







Disclaimers
This material has been distributed for informational and educational purposes only, represents an assessment of the market environment as of the date of publication, is subject to change without notice, and is not intended as investment, legal, accounting, or tax advice or opinion. StashInvest assumes no obligation to provide notifications of changes in any factors that could affect the information provided. This information should not be relied upon by the reader as research or investment advice regarding any issuer or security in particular. The strategies discussed are strictly for illustrative and educational purposes and should not be construed as a recommendation to purchase or sell, or an offer to sell or a solicitation of an offer to buy any security. There is no guarantee that any strategies discussed will be effective.

Furthermore, the information presented does not take into consideration commissions, tax implications, or other transactional costs, which may significantly affect the economic consequences of a given strategy or investment decision. This information is not intended as a recommendation to invest in any particular asset class or strategy or as a promise of future performance. There is no guarantee that any investment strategy will work under all market conditions or is suitable for all investors. Each investor should evaluate their ability to invest long term, especially during periods of downturn in the market. Investors should not substitute these materials for professional services, and should seek advice from an independent advisor before acting on any information presented.

Past performance does not guarantee future results. There is a potential for loss as well as gain in investing. StashInvest does not represent in any manner that the circumstances described herein will result in any particular outcome. While the data and analysis StashInvest uses from third party sources is believed to be reliable, StashInvest does not guarantee the accuracy of such information. Nothing in this article should be considered as a solicitation or offer, or recommendation, to buy or sell any particular security or investment product or to engage in any investment strategy. No part of this material may be reproduced in any form, or referred to in any other publication, without express written permission. StashInvest does not provide personalized financial planning to investors, such as estate, tax, or retirement planning. Investment advisory services are only provided to investors who become StashInvest Clients pursuant to a written Advisory Agreement. For more information please visit www.stashinvest.com/disclosures.

*The Standard & Poor’s 500 (S&P 500) is an unmanaged group of securities considered to be representative of the stock market in general. It is a market value weighted index with each stock’s weight in the index proportionate to its market value.

Note: These are just a few of the investment choices available on Stash and may not be suitable for everyone. Depending on your risk profile, you may not see the investments on Stash. See our Disclosures.

ETFs may not be appropriate for all investors. To determine if these ETFs are an appropriate investment for you, carefully consider the ETF’s investment objectives, risk factors and charges and expenses before investing. This and other information can be found in the ETF’s prospectus. ETFs are subject to risks similar to those of other diversified portfolios. Although ETFs are designed to provide investment results that generally correspond to the performance of their respective underlying indices, they may not be able to exactly replicate the performance of the indices because of expenses and other factors.