CHICAGO, IL — (Marketwire) — 03/18/13 — As defined by — financial planner and President of Kabarec Financial Advisors, Ltd. — asset allocation is a strategic approach to diversifying investments to ensure a greater return when one comes to collect for funding retirement or other necessary major life events. While the practice of allocation is an important part of intelligent investing, Kabarec, as well as a recent ABC News , explain that there are many myths on the subject that may have many losing out on valuable investments.
Among the myths mentioned in the article, one of the most dangerous is putting allocation on “cruise control.” For instance, many investors may have falsely followed myths such as “an unchanging asset allocation will always protect your portfolio from loss because the values of different asset classes always move in different directions.” The article addresses another potentially harmful myth that “time heals all wounds, so a well-constructed asset allocation, left unchanged, will protect you from risk over the long term.” However, in reality mortal time frames and changing markets — including crises within them — can make these “cruise control” strategies ultimately a bad idea.
In response to the criticism of “cruise control” allocation, Michael Kabarec states, “Cruise control for retirement portfolios are akin to the old Edsel. Financial markets have changed dramatically since grandpa-s time. The days of buying and holding a security forever are over. The financial markets move too fast in this day and age of computerized trading. Good companies today are not necessarily good companies tomorrow. For example, that blue chip named Kodak.”
When it comes to financial planning, especially strategies that aim to improve retirement funds, Michael Kabarec explains that following any sort of age-old myth is never a good approach alone. He recommends that those who are proactive about diversifying and protecting investments in a strategic fashion should consult with a trusted financial planner to help provide constant review of accounts and asset performance.
“There is no substitute for a professional review at least once a year, because of the changing market conditions that could impact assets. In addition, one-s own circumstances could also change. Even if you do not seek professional help, review your portfolio based upon common sense on a regular basis,” concludes Michael Kabarec.
ABOUT:
is a trusted investment management professional who carries more than 30 years of experience in this challenging career field. Throughout his professional history, Michael Kabarec has gained strong insight into what skills and knowledge is necessary to perform tax management, investment management, wealth building services, small business development and retirement plans. Today, Michael Kabarec relies on his proficiencies in these areas to serve as President at Kabarec Financial Advisors, Ltd. — a Chicago-based investment management, financial and wealth advisory firm that has existed since 1982.