Gas Prices
2. Justify your allocation based on your outlook for systematic risk in the U.S.
Systematic risk is primarily based on the risks that are associated with actual or real events that may affect the market. This includes interest rates, inflation, wars and all that can affect the market and cannot be avoided through diversification. Systematic risk can be associated with riskier securities if and when compared to bonds. This rate of return is mainly unpredictable but can be profitable. My reasoning for allocating the funds amongst the three asset categories involve the rule of thumb. The rule has no substantial or proven evidence to be correct but it can be used to allocate funds. This rule of thumb requires that investors take their age, subtract it from one hundred, and then use that number on equities. Once done, use the percentage for equities and subtract it from one hundred and use that amount for bonds. Not only did I use the rule of thumb, I also based my investment on how and when I would like to receive the return. I choose to invest a larger amount of funds in equities mainly because I wish to make substantial returns and can tolerate a restively long investment time frame. I also believe that I should make a riskier investment in equities. This is due to the fact that I am fairly young and if I were to encounter a loss, I could bear it and have time to revive myself. On the other hand, I chose a smaller amount to invest in bonds because I do not have a need to preserve my assets and can stand to have fluctuations in the value of my asset. Lastly I did not invest as much into cash because I do not believe that it is necessary to have a maximum return on my money. I believe that my primary focus should be in equities because I can receive a higher return and if needed I could recover quickly. Many people may believe that this method is not strategic and may not work but honestly there is no proven strategy for allocating funds for investments. Many people
Systematic risk is primarily based on the risks that are associated with actual or real events that may affect the market. This includes interest rates, inflation, wars and all that can affect the market and cannot be avoided through diversification. Systematic risk can be associated with riskier securities if and when compared to bonds. This rate of return is mainly unpredictable but can be profitable. My reasoning for allocating the funds amongst the three asset categories involve the rule of thumb. The rule has no substantial or proven evidence to be correct but it can be used to allocate funds. This rule of thumb requires that investors take their age, subtract it from one hundred, and then use that number on equities. Once done, use the percentage for equities and subtract it from one hundred and use that amount for bonds. Not only did I use the rule of thumb, I also based my investment on how and when I would like to receive the return. I choose to invest a larger amount of funds in equities mainly because I wish to make substantial returns and can tolerate a restively long investment time frame. I also believe that I should make a riskier investment in equities. This is due to the fact that I am fairly young and if I were to encounter a loss, I could bear it and have time to revive myself. On the other hand, I chose a smaller amount to invest in bonds because I do not have a need to preserve my assets and can stand to have fluctuations in the value of my asset. Lastly I did not invest as much into cash because I do not believe that it is necessary to have a maximum return on my money. I believe that my primary focus should be in equities because I can receive a higher return and if needed I could recover quickly. Many people may believe that this method is not strategic and may not work but honestly there is no proven strategy for allocating funds for investments. Many people