Accumulation planning addresses an individual's investment needs, asset allocation, and the suitability of different types of securities in light of your goals and risk tolerance.
Asset allocation is used to distribute your investable assets among a variety of investment categories. This process aims to:
Reduce overall investment risk
Create more reliable investment forecasts
Improve the risk/return tradeoff of your portfolio
Accumulation planning also involves the choice of securities for your investment portfolio. Basic securities are stocks, bonds, ETFs, and mutual funds. Separately managed accounts, indices, short-term assets, and annuities can be used to optimize your portfolio.
The goal of asset allocation is to provide you with the risk/return scenario that is most comfortable for you.
Investors should note that diversification does not assure against market loss and that there is no guarantee that a diversified portfolio will outperform a nondiversified portfolio.