Practice appropriate asset allocation.

Anyone can become wealthy, but learning how to appropriately allocate your assets is how you will stay wealthy. If you keep all your eggs in one basket and invest in just one type of investment (e.g., stocks/bonds), you could lose all your money in one shot.


  1. Understand what asset allocation is.
    It’s not just diversification; asset allocation refers to dividing up your money among different types of investments (e.g., stocks, bonds, real estate, etc.) and in specific proportions that you decide in advance, according to your goals or needs, risk tolerance, and stage of life.

  2. Allocate how much cash you will need.
    Decide how much cash you need to have on hand and decide where you want to keep it—in your home, in a bank, etc. Alternatively, you can buy into a short-term investment known as money market funds, which act as a cash equivalent.

  3. Allocate how much of your assets go into fixed-income investments.
    This refers to bonds and CDs (certificates of deposit). Alternatively, you may choose to invest in structured notes—they are similar to CDs, but aren’t covered by FDIC insurance.
    If you choose to invest in bonds, US Treasury Bonds provide the most security. However, they tend to have lower returns, so you can also consider investing in corporate bonds and municipal bonds (although these can be risky).

  4. Allocate how much of your assets go into your home.

  5. Allocate how much of your assets go into your pension.
    Don’t ignore your pension—it will be extremely valuable to you once you retire.

  6. Allocate how much of your assets go into your annuities.
    Remember, most annuities will cause you to lose money, but a select few can be very useful.

  7. Allocate how much of your assets go into life insurance.
    This is so that you can provide for your family even if you pass away.

  8. Diversify your assets across classes, markets, and time.
    Essentially, allocate your assets into different types (e.g., life insurance, stocks, and pension), markets (stocks in various companies), and time (assets that may not be valuable now but will be in 15 years).
    Here’s a pro tip: take your emotions out of investing and look at each investment opportunity objectively. It will be a lot easier to invest wisely.


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