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Investing 101- Asset Class Selection

This show launches show number one of the series. “Financial Detox Investing 101”. Jason shares a recent experience while traveling with some individuals who are well versed in business but have been misinformed based on the overload of information when it comes to investing. Information that is presented in multiple mediums, none of which is pointed and direct in helping them understand what they should be doing with their accumulated wealth.

Alex enters the conversation by stating that often people will, quoting the phrase, “buy what you know”. People tend to buy stock in companies that they know or products that they use and trust. This series will cover five necessary components. Things that you or your adviser should be doing daily to manage your assets. This show, one of a series of five, will focus on Asset Allocation.

Alex and Jason go into defining the different asset classes and how many sub-asset classes there are. Jason directs the focus of today’s show on Large Asset Classes. Alex and Jason will cover Cash, Bonds, Publicly Traded Stocks, and Alternatives. Jason defines Alternatives by offering some examples and Alex adds that this assets class tends to attract investors with exciting products but can also cause the most damage if not properly understood.

After the first commercial break, Jason and Alex continue the topic of allocation and use the correlation of life and having multiple things that you enjoy to asset classes and being diversified in how you should invest. Alex poses some question; Why should you use multiple asset classes? Why does it matter? And can I just buy stocks? Jason responds and shares some insight on how the firm builds and manages portfolios along a spectrum. A spectrum that covers all investment needs from capital preservation to aggressive.

Alex brings the discussion back to asset allocation and asks Jason to further describe the major asset classes in a typical IDA portfolio and how many asset classes one expects to see. After responding, Jason spends some time discussing bonds and some sub asset classes within the bond market. While discussing the types of bonds available, Jason takes the conversation deeper and touches on yield and the need and desire for some investors and advisers to chase yield. Unknowingly exposing their portfolios to excessive risk.

Jason and Alex segue into equites and the sub asset classes within the equities market. Jason shares the benefits of being globally diversified based on historical data, even though the current U.S. equity markets have been a successful investment.

Alex closes the show with stating that the point of this series is to learn to control what you can control, diversify, and follow evidence based proven facts and data when building a successful portfolio. 

 

In this show you will learn about:

– Asset Allocation

– Alternatives

– Bonds

– Equities

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