Asset Allocation and Portfolio Diversification

Free CFP Exam lesson in Investment Planning. 13 min read, ~1,941 words.

Any correlation below +1.0 provides diversification benefit, you do not need negative correlation. Strategic allocation sets the long-term mix; tactical allocation makes temporary deviations. Rebalance tax-efficiently: new money first, redirect income, harvest losses, sell appreciated lots last. Asset location: bonds/REITs in traditional IRA, growth in Roth, low-turnover index in taxable...

What this lesson covers

• Content
• Example 1
• Example 2
• Common Mistakes
• Key Takeaways
• Exam Shortcuts

Learning objectives

• D.31

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