Vanguard's framework for constructing diversified portfolios
May 7, 2013
The best strategy for meeting long-term financial goals is to have a well-thought-out plan focused on diversification and be disciplined about maintaining it. A new Vanguard research paper discusses six major components of portfolio construction: defined investment goals and constraints; broad strategic asset allocation; sub-asset allocation; indexed and/or actively managed strategies; allocation of investments in taxable and/or tax-advantaged accounts; and the selection of individual managers, funds, or securities to fill allocations.
All investing is subject to risk, including the possible loss of the money you invest. Diversification does not ensure a profit or protect against a loss. We recommend that you consult a tax or financial advisor about your individual situation.
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