Product Allocation and Asset Allocation - do you know the difference?

Putting all your eggs in one basket is never a good idea  - ask those who invested all their disposable, and maybe even some borrowed funds, in Nortel stock what can happen!
Asset allocation is used to spread your risk among several different types of assets including:

• cash and cash equivalents including money market funds, 
• fixed interest securities (GICs, term deposits, government bonds, corporate bonds),
• equities (preferred stocks, common stocks etc).

Conservative asset allocation strategies, when properly applied, can be effective in protecting you from big swings in the market. However, asset allocation by itself is not enough to fully protect your retirement nest egg..

Product allocation,on the other hand, is a way of further diversifying your investments and involves placing your assets into three distinct product categories to help provide a sustainable retirement income. 

An entertaining and useful explanation of this strategy is presented by a math professor and an investment advisor in "Pensionize your nest egg".

For more information about how to get started on your own personal pension plan you can contact us at Celesta Financial to learn more about how we can help you achieve your goals for retirement.  You can also learn more details about this concept of retirement planning at a website developed by Manulife Financial. See Help my savings last.