Treasury Inflation-Protected Securities (TIPS) are inflation-indexed bonds that are issued by the U.S. Treasury.  If you’ve never taken a good, hard look at these one-of-a-kind bond investments, now is the time.  Regardless of your financial circumstances or risk profile, there are plenty of reasons to consider adding TIPS to your long-term asset allocation plan. [...]

Now that you’ve decided on a risk-appropriate equity/bond split and broken down the equity and bond portions of your portfolio into target percentages, you’re technically finished with the asset allocation process.  Of course, there’s still the small matter of implementing your plan.  With thousands of investments to choose from, how should you go about narrowing down the field?  I’m glad you asked. [...]

After spending some time getting to know your risk profile (Asset Allocation Step 1), you should have a much better idea of an appropriate equity/bond split for your portfolio.  Now we can move on to the second step of the asset allocation process: breaking down the equity and bond portions of your portfolio.  [...]

Choosing an asset allocation, or the mix of stocks, bonds and cash in your portfolio, is probably the most important investment decision that you’ll make.  A study by Ibbotson Associates concluded that asset allocation decisions determine about 100 percent of investment performance for those who follow a low-cost, long-term investing strategy.  Similarly, when investors underperform the market, the primary culprit is a failure to maintain one’s allocation during tough times.   [...]

Real Estate Investment Trusts (REITs) were created by Congress in 1960 so that the general public would have access to income-producing real estate investments.  Today, REITs account for more than $250 Billion of US equity investments, or 1-2% of the public market, having doubled their market capitalization over the past decade.  These securities are appealing because of their unique structure, historical risk-adjusted returns, and significant diversification benefit.  Long-term investors should seriously consider adding REITs to their asset allocation plans.  [...]