Asset Allocation
Diversification at Work
Diversifying money among different types of investments is one of the most basic principles of investing and one of the best ways to balance risk and reward. Diversification reduces risk by spreading money over a number and a variety of investments. It's the basic principle illustrated by the saying "don't put all your eggs in one basket."
Diversification is a proven long-term strategy as this hypothetical example illustrates. A $10,000 investment each year for 20 years (from 1984 to 2003) allocated over all asset classes outperforms "buying low" by almost $200,000 and "chasing hot pick" by almost $100,000. Rebalancing, or diversifying again each year, does even better-outperforming one-time asset allocation by almost $20,000. Of course, diversification is no guarantee for growth in any particular period.
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Asset Allocation
Asset allocation is diversification at work. It is the process of dividing up money among asset classes or the various places to invest in stocks, bonds, real estate and cash, for example. While asset allocation cannot guarantee positive performance, it does help
balance risk and reward | diversity your holdings | plan for the long term
Making Asset Allocation Easy
Diversification is important, no matter what stage of life your client is experiencing. If nearing retirement there may be different financial objectives than a person just embarking on a career, but both can benefit from diversification. Discovering what investment style is right for your client is a critical step in the asset allocation process. To find out which model is right for your client such as aggressive, conservative or somewhere in between, complete the quick questionnaire by clicking on Morningstar Asset Allocator, from Morningstar Associates, LLC. on the right side of the page.
Morningstar Asset Allocation Models
Some asset allocation models simply recommend a combination of asset classes. This type of model may appear diversified but if the asset classes all invest in the same area of the market, it is not truly diversified. Morningstar has looked at every individual stock and bond in the investment options' portfolios to engineer their asset allocation recommendations. This analysis combines Morningstar’s assessment of quality with an additional study of performance correlation, security and sector overlap to help ensure the individual investment options work well together.
How Can Ameritas Advisor Services help?
If you have clients that own, or are considering purchasing, an Ameritas variable annuity or variable life insurance policy, use the Morningstar Asset Allocation Tool and asset allocation to help select or manage investment options. For more information call the Ameritas Advisor Services salaried professionals at 1-800-555-4655.
Variable products are issued by Ameritas Life Insurance Corp. and underwritten by affiliate Ameritas Investment Corp. They have investment risk, including the possible loss of principal. Before investing, carefully consider the investment objectives, risks, fees and other important information about the policy issuer and underlying investment options. This information can be found in the policy and investment option prospectuses, which are available on this web site. Please read the prospectuses carefully before investing.
Morningstar Associates, LLC, has provided data and tools for use by Ameritas and its representatives. Neither Morningstar Associates nor Morningstar, Inc. is acting as an investment adviser with respect to the use of the asset allocation product. Although the data is gathered from reliable sources, neither Morningstar Associates nor Morningstar, Inc., guarantees their accuracy, completeness or timeliness. Neither Morningstar Associates nor Morningstar, Inc. is affiliated with Ameritas.
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