Proper asset allocation is often the cornerstone of an appropriate investment strategy and involves diversifying an investment portfolio among different asset classes to balance likely returns versus risk. Proper allocation takes into account the investor’s goals and his or her time frame in regards to investing. Younger investors may have a higher risk tolerance because they take longer to recoup any losses while potentially making more significant gains. Older investors with less time to invest may have a more conservative approach. Each asset category typically has a different risk/return level.
Asset allocation requires an individual analysis, based on the particular circumstances and objectives of the investor. It is also one of the most critical decisions made for investor’s portfolios. Ninety percent of an investor’s returns may be derived from proper asset allocation and/or diversification. If your portfolio has been improperly allocated by a financial institution, stockbroker, or financial advisor, it often results in unnecessary investment losses. If you believe you have suffered financial losses due to negligent asset allocation, allocation fraud, or improper asset allocation, you may have grounds for legal action.
Asset Classes and Diversification Strategies
Your financial institution, stockbroker, investment advisor, and bank have an obligation to you to understand your investment objectives and goals and to recommend an appropriate investment portfolio for you. Overconcentration in a specific security, type of security, or asset class may be evidence of negligence or intentional wrongdoing. If such wrongdoing causes losses, you may have grounds to sue your financial institution.
The general categories of asset classes include:
- Stocks (equities)
- Bonds (fixed income)
- Commodities
- Currency
- Cash instruments
- Real estate
Retain a Miami Improper Asset Allocation Lawyer
If you believe your financial losses stem from your broker or financial institution’s negligence, incompetence, or intentional wrongdoing, Levin Law will review your potential case and help you recover compensation for your losses.
Contact a Miami improper asset allocation attorney at (305) 402-9050 today. We look forward to speaking with you to determine your options through a free case evaluation.
