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.
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.
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.
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.
Click any box to learn about that fund
Daily Income FundAsset Class: Short-Term Bonds
Short-Term Government Securities FundAsset Class: Short-Term Bonds
Short-Term Bond FundAsset Class: Intermediate-Term Bonds
Intermediate Bond FundAsset Class: Large-Cap Value and Growth Stock
Stock Index FundAsset Class: Large-Cap Value Stock
Value FundAsset Class: Large-Cap Growth Stock
Growth FundAsset Class: International Stock
International Equity FundAsset Class: Small-Cap Stock
Small-Company Stock Fund
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.