Asset allocation, age, time horizon, risk tolerance, and financial goals

Asset allocation strategies do change with age, but investors must also take other factors into account, including investing time horizon, risk tolerance and financial goals.  

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Emily Farrell: So, Kahlilah, “How do allocations change with age?” So we talked a little bit about age. I think you kind of touched on it in the target-date funds and also earlier in our discussion.

Kahlilah Dowe: Right. So they generally get more conservative with age, but more so your time horizon. And I think it’s important to make that distinction because I work with clients who are, of course, getting older, but their portfolios are not necessarily getting more conservative.

And it could be that their time horizon is still far off or they’re investing, like Kim said, for legacies. So, generally speaking, yes, they do get more conservative as you approach your time horizon. Again, the rate at which it gets more conservative is just depending on the risk tolerance and the goal.

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