Understanding how asset allocation works is relatively easy compared to actually sticking with a plan and keeping track of your investments. Fortunately, you can get help.
Your financial adviser or broker
One way to keep track of your asset allocation is by using one financial institution — a brokerage firm, mutual fund, or bank — for all your investments except your employer-sponsored plan. That way, you’ll get one consolidated statement each month that shows all of your assets and the current value of your portfolio.
Your statement will also alert you to imbalances that may develop in your asset allocation if one asset class turns in a much stronger performance than the others. For example, if the return on bonds outpaces the return on stocks, the bond portion of your portfolio might turn out to be a larger percentage of the total account than you had allocated. That might mean you’d want to increase the percentage of money going into stocks to build up that class and get back where you intended to be. This process is known as reallocation.
Online resources
You can also track your investments online. There are a number of computer programs that can help you organize, analyze, and keep track of your asset allocation. Brokerage firms and mutual fund companies offer many of these programs, as do independent Web-based companies.
