Asset Allocation Analogies

This survey will be used to determine the best asset allocation analogy as submitted by your peers. Please vote "yes" on your favorite analogy and be sure to also check "no" on the other entries in order for the survey to tabulate correctly. When you are finished voting, be sure to check on submit answers.

Please only vote once, and thank you for participating in this survey.

Name


  1. Asset Allocation is like a rocket ship. You are the pilot, and all you need to do is stay on course. Keep your objective in mind (Moon=Goal). We do the hard work by matching you with the right mix of stocks, bonds, and cash (the three engines of the ship), based on your objectives and risk tolerance.

    Stocks can be very powerful (like a turbo engine), but can fail quickly. Bonds aren't as unpredictable, but don't have as much thrust either. Cash burns pretty steady and has its place, but can expose you to other risks (gravity=inflation).

    You don't want to have just one engine burning. It's best to find the right combination to meet your goals. And an allocation product will make sure you are properly diversified within each asset class. Diagram included, but unavailable for the survey.
    Yes
    No


  1. Do you play golf? Investing is a lot like golf. You must select the clubs (investments) you will use based on the length to the holes (goals). In selecting which clubs you will use for the holes, you must also consider how well you hit your clubs, or how aggressively you want to go after a hole (risk tolerance).

    Successful golfers know that they must have an assortment of clubs consisting of woods (aggressive investments or stock funds), irons (moderate investments or bond funds), and a putter (conservative investments = money markets). My job as your caddies is to get to know the holes on the course (your goals), and how you hit your clubs (your risk tolerance) to help you determine the best mix of clubs (investments) to include in your golf bag (your portfolio).

    Yes
    No


  1. Imagine an orchestra with 80 musicians. For an orchestra to perform well, 100% accuracy is required from the entire group. When all musicians are playing together, however, one musician neglecting to play may not be noticeable. The diversity of the instrumentation means if one violin out of a section of five forgets to play on measure, the other four will likely provide enough volume to hide the problem.

    When it comes time for the violin solo, forgetting to play one measure is a big problem. There is no coverage from the other violins to cover the mistake. Investing a significant portion of your money in one fund is like playing a solo. There’s no buffer to protect you if you make a mistake.

    Yes
    No


  1. Think of owning a mutual fund like owning a car lot. Owning one aggressive fund like you currently have (Ultra) is like owning a car lot with only one type of car, let’s say SUVs. Sure you have different makes and models, trim packages, etc. but for all intents and purposes they have similar pros (power and size) and cons (gas mileage). If gas prices sky rocket, your car lot is going to be hit pretty hard and the value of your SUVs is going to go down.

    Asset allocation funds are like owning a car lot with different types of cars. SUVs, Trucks, Sedans, Hybrids, Sports Cars, etc. Now if gas prices soar, SUVs and Trucks may get hit hard, but your lot as a whole won’t be as affected, as you have other types of cars that will pick up the slack, and can sell well (Hybrids) in this environment.

    Yes
    No





Jana Meyers