How to Choose an Asset Allocation | Rational Reminder 343

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Choosing an asset allocation is a crucial investment decision, as it determines expected returns and risk exposure. During this episode, we uncover what this means, exploring topics such as why risk may not always be the best assessment method. We unpack the three factors that John Grable’s risk profiling framework considers: behavioural loss tolerance, the ability to take risk (which assesses the financial capacity to withstand losses without affecting lifestyle), and the need to take risk. Many investors sabotage their returns by selling after losses and buying after gains, and we discuss the reasons behind this. We also explore why stocks tend to become less risky over long horizons, while bonds can be vulnerable to inflation and interest rate changes, before explaining why investors should focus on compensated risks. In the aftershow, we address listener comments on absolute returns, XEQT, why we have made certain sponsorship decisions, and more. To gain a deeper understanding of risk and avoid common pitfalls that can undermine your returns, tune in today!

Timestamps:

0:00:00 Intro
0:06:07 Main Topic: Choosing an Asset Allocation
1:02:25 Aftershow

Links From Today’s Episode:

G&L risk tolerance assessment https://cafnr.missouri.edu/divisions/...
Rational Reminder on iTunes — https://itunes.apple.com/ca/podcast/t....
Rational Reminder Website — https://rationalreminder.ca/
Rational Reminder on Instagram —   / rationalreminder  
Rational Reminder on X — https://x.com/RationalRemind
Rational Reminder on TikTok — www.tiktok.com/@rationalreminder
Rational Reminder on YouTube —    / channel  
Rational Reminder Email — [email protected]
Benjamin Felix — https://pwlcapital.com/our-team/
Benjamin on X — https://x.com/benjaminwfelix
Benjamin on LinkedIn —   / benjaminwfelix  
Cameron Passmore — https://pwlcapital.com/our-team/
Cameron on X — https://x.com/CameronPassmore
Cameron on LinkedIn —   / cameronpassmore  
Mark McGrath on LinkedIn —   / markmcgrathcfp  
Mark McGrath on X — https://x.com/MarkMcGrathCFP
Dan Bortolotti — https://pwlcapital.com/our-team/
Dan Bortolotti on LinkedIn —   / dan-bortolotti-8a482310  
Canadian Couch Potato Blog — https://canadiancouchpotato.com/
Canadian Couch Potato Podcast — https://canadiancouchpotato.com/podcast/

Papers From Today’s Episode:

https://zbib.org/e2b0d1c3b3ae444db622...

'The Grable and Lytton risk-tolerance scale: a 15-year retrospective’ — https://static.arnaudsylvain.fr/2017/...