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    Selecting how much of your portfolio to allocate to stocks, bonds and money market funds is the most important of all investment decisions. It not only determines how much your portfolio will return but how much risk you will be taking to achieve those returns.

    At Robshaw & Julian Associates we work closely with our clients to determine the asset allocation which best meets their needs. This includes a thorough discussion of client circumstances and attitudes.

    The two key variables in setting asset allocation are time horizon and volatility tolerance. Time horizon refers to the amount of time you expect your money to remain invested. If you are investing to make a big purchase at a specific time in the future, the time until that purchase will be made is your investment time horizon. The time horizon for a retirement portfolio, however, is not the time until you retire. This is because you need to remain invested during your retirement.

    Volatility tolerance is both a personal and a practical matter. Some investors with long time horizons are comfortable with 100% in stocks, and stayed with their allocation during major market declines. Others would find such a situation completely intolerable. For them, the right allocation to stocks is one they can live with even during a serious decline.

    Retirees who are selling off their investments for living expenses want to avoid the need to sell when the market has declined. For them, the reduced volatility of a balanced portfolio is essential to preserving their income stream.