Asset allocation is, put simply, the distribution of your assets over a broad mix of stocks and bonds. This is a handy method for reducing the level of investment risk, due to the variation in behavior of asset classes. Diversification refers to dividing your investments over a wide range of investment styles and market sectors. These may include both growth and value stocks, or corporate and government bonds. With diversification as a clever investment tool, you avoid being hit dramatically when a particular market declines in value. Rebalancing is the periodic assessment and adjustment of asset class allocation, often performed quarterly. This is a process that should be completed regularly over time to ensure that decisions made in earlier months are still valid as the market fluctuates.
About the Author: Highly respected finance professional George Divel heads Global Wealth Advisors as President of Investments and is a Financial Advisor. Drawing on more than ten years of finance industry experience, George Divel dedicates a wealth of knowledge and experience to advising clients from all backgrounds, from beginners to seasoned investors. Securities and advisory services offered through Capitol Securities Management, Inc. Member FINRA & SIPC. A registered Broker/Dealer and Registered Investment Advisor.