Why Your Investment Allocation Is Probably Wrong - Ep. 78

In this episode of FPOG, Justin and Jared discuss the most common mistakes they see related to constructing an investment allocation.

They also talk through best practices when it comes to thinking through how to construct your mix of investments.

Here are three key takeaways from the episode:

1. Understanding Investment Allocation

Investment allocation is crucial in determining your future returns.

It involves structuring your investments across different accounts and asset classes. From stocks to bonds, real estate, and more, your allocation plays a significant role in shaping your investment outcomes.

It's essential to look at your entire household's assets and implement the right allocation for the highest after-tax return.

2. Avoiding Common Mistakes

We highlight common errors in investment allocation, such as overlooking household allocation versus account-level allocation, mental accounting of certain assets, and the importance of revisiting and updating your allocation over time.

These mistakes can have a significant impact on your financial well-being.

3. Risk Tolerance vs. Risk Capacity

It's essential to differentiate between risk tolerance and risk capacity when constructing your investment allocation.

While risk tolerance reflects your ability to handle market volatility, risk capacity focuses on how much risk you need to take to achieve your financial goals. Understanding these concepts is key to building a robust investment strategy.

If you're interested in learning more about optimizing your investment allocation and avoiding common pitfalls, be sure to tune in to our latest episode:

Connect With Us:

Facebook

Linkedin

Disclosure: This information is for informational purposes only. Nothing discussed during this video should be interpreted as tax, legal, or investment advice. If you have questions pertaining to your specific situation, please consult the appropriate qualified professional.