GOAL: Big Picture Planning

Whatever your financial goal is, knowing how to build an effective, appropriate asset allocation plan is a valuable investing skill. Asset allocation simply means mixing different types of funds to find the right combination to meet your needs.

If you plan to need the money in…Your portfolio should be…A typical portfolio might include…
1 year or less CONSERVATIVE Money market funds or low-risk bond funds with little to no stock funds
1-3 years CONSERVATIVE Bond funds and money market funds, mixed with a small amount of stock funds for growth potential
4-7 years MODERATE A balance of bond and stock funds — more bond funds if you’ll need the money sooner, more stock funds if you don’t
8+ years AGGRESSIVE A mix of stock funds balanced with a small amount of bond funds for risk management

Asset allocation does not guarantee a profit or protect against a loss in a declining market. It is a method used to help manage investment risk.

The Process in 3 Easy Steps
Step 1

Know your timeline

Knowing how much time you have to accomplish your financial goals is key to choosing the right mix of investments. That’s because the less time you have, the less time you have to recover if you lose money in a short-term market downswing. Broadly, most asset allocation plans can be labeled conservative, moderate or aggressive based on the amount of time to the goal.

Step 2

Use your risk tolerance to narrow your options

There are many ways to build a conservative, or moderate, or aggressive portfolio. You’ll find several such choices in the Make a Plan section of the site. You can simplify the decision by considering your feelings toward risk. If you are comfortable taking on some risk, incorporate more growth investments in your portfolio. If not, shade your plan toward lower-risk funds. But remember that lower risk generally comes with lower reward – investments that prioritize preservation of capital may not offer the growth you need for long-term goals.

  • Suggested for this goal
  • Could also work for this goal
  • Not typically used for this goal
Step 3

Choose your funds

Now you are ready to select an investment mix to suit your most important goals. The Make a Plan section of the site offers multiple model portfolios suited to conservative, moderate or aggressive goals. When you select your investments, just assign percentages to the Homestead funds that correspond to the model you’ve chosen.

Diversification does not guarantee a profit or protect against a loss in a declining market. It is a method used to help manage investment risk.

Your next step: 
You can open an account in any of our funds online today. If you need help deciding which fund or combination of funds is right for you, visit the Make a Plan page.  Or, call the Homestead service line at 800.258.3030 and choose option 2.

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