Starting Out

Asset Mix Strategy
Asset mix is the blend of stocks, bonds and cash that you hold in your portfolio. The asset mix strategy is used to manage the risks (and rewards) that come from different types of securities. For example, certain types of securities - such as stocks - may do well in the long run, but they can be volatile in the short-term.

Over the long run, stocks are clear winners over bonds and treasury bills, but this performance comes with the risk of greater short-term price fluctuations. A good asset mix strategy finds a balance between the longer-term, superior returns generated by stocks and the shorter-term up-and-down gyrations of the stock market.

Your asset mix strategy will be unique to you and your investment objectives. However, in general, the greater the desire for growth and inflation protection the greater the exposure to stocks; a short time horizon and desire for income and capital preservation will reduce the proportion invested in stocks. By holding the right mix of different types of securities, your portfolio will be much better positioned to weather volatile times.

For more information, contact an Investment Advisor at a BMO Nesbitt Burns branch near you.

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