If you are one of many Americans who believes your best investment strategy is to buy low and sell high, you may want to explore the possibilities of asset allocation. Asset allocation is the decision of what percentage of your assets are invested in various asset classes. Strategic asset allocation involves establishing different weightings for various asset classes and making few changes in those weightings over the short run. As a result, although no investment strategy can guarantee success, a properly allocated portfolio may be more likely to participate in positive investment trends while at the same time reducing volatility when the investment climate changes.

The asset weightings in your portfolio will depend on your individual needs and financial objectives. As your lifestyle changes, you can, with the help of your financial advisor, change the weightings in your portfolio to reflect your changing goals. For example, in your early investment years, you will probably want a larger portion of your assets invested in equities, for long-term growth. Although past performance cannot guarantee future results, equities have historically outperformed other investment vehicles. As you get older and need to start investing more conservatively, you will probably want to start shifting more of you assets into less volatile investment vehicles, such as fixed income investments.