Page 143 - A Canuck's Guide to Financial Literacy 2020

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Asset Management is an important part of your financial plan as your funds will be divided
in different asset classes, usually cash, fixed income and equities in order to help you
achieve your financial goals.

Strategic Asset Allocation

The strategic asset allocation that you will embrace for your portfolio must be in line with
your risk tolerance and investment objectives. In addition, you should consider your
expected rate of return, time horizon and macroeconomic factors.

By dividing your money in different types of asset classes, you’ll be able to minimize your
risk and improve your returns.

Diversification

One of the most important things you can do when it comes to creating your strategic asset
allocation is embracing multiple asset classes in order to diversify. Diversification can
minimize risk without adversely affecting return. You can reduce your risk in the portfolios
by including securities that have low correlation with one another. Doing so eliminates all