Time for another addition to the Risk Parity Basics library for those getting started with portfolio construction. This time: strategic asset allocation. What is it? What types are there? How can it help investors?
Obsessing about the right time to be in or out of the market is harmful to an investor's long-term prosperity, but is still an important signal that an investor either doesn't have a systematic approach to investing, or is following one that doesn't suit them. Know what can help?
Regardless of the investing environment, diversification can help lower total portfolio volatility and stabilize, or even increase, returns. This wonderful illustration demonstrates just how important diversification is and what impact combining multiple asset classes can have in your portfolio.
