How Much of a Good Thing Do You Want?

Almost every book on financial planning and investing discusses asset allocation: how much of one's portfolio should be in stocks (domestic and international, large-cap and small-cap, growth and value), how much in bonds, how much in real estate, and how much in cash. And let's not forget commodities and other “alternative investments.” Some experts say that as we get older we should shift more into bonds and put less in stocks in order to reduce risk, while others recommend that our asset allocation be adjusted according to the economic, interest rate, and investment environments—or even one's tolerance for risk and volatility.

I don't know if there is a “right” answer, but my personal belief is that the ...

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