ShmoopTube

Where Monty Python meets your 10th grade teacher.

Search Thousands of Shmoop Videos


Econ Videos 216 videos

Finance: What does "Breaking the Buck" Mean?
7 Views

What does “Breaking the Buck” mean? Breaking the buck means that a money market fund’s value has dropped to less than $1. This happens becaus...

Finance: What is the Tax Reform Act of 1986?
4 Views

What was the Tax Reform Act of 1986? Hit play to find out.

Finance: What is Disinflation?
5 Views

What is Disinflation? Disinflation is a term used for an interim slowdown of inflation rate. For example, a reduction of inflation growth from 3.5%...

See All

Finance: What is a Strategic Asset Allocation? 6 Views


Share It!


Description:

Strategic asset allocation means allocating your assets...strategically. Yup, no crazy plot twists here.

Language:
English Language

Transcript

00:00

finance a la shmoop what is strategic asset allocation all right well it's

00:08

being smart investing wisely diversifying betting on tailwind and [Pie chart showing portfolio areas]

00:13

avoiding headwinds and that's about it that's what the way cooler and fancier [Definition of strategic asset allocation]

00:18

sounding strategic asset allocation term actually means

00:22

yeah strategic so what does that imply well think about it in context if you're

00:27

92 years old and you have 300 grand your name and you're still able to run a 20 [Old guy holding stacks of money]

00:32

minute mile well then you can't risk investing in equities at least not all

00:37

your money in them in the short run they're way too volatile they go up [Value of equities going up and down]

00:40

there to go down they go sideways they go bankrupt and it's likely that your

00:43

remaining run is well short you'll need the money so you can't handle the risk [Gravestone for the old guy]

00:48

of equities dropping if 40% in value over a two-year period which seems to [40% drop shown on the chart]

00:53

happen to them every decade or two instead you need to be strategic about

00:58

the dough and the time you have left and if you're 19 and you just inherited dear [Clock ticking]

01:03

old uncle Earl's oil fortune he calls it Earl over very long periods of time the [Kid walks up to a vault full of money]

01:09

market has historically gone up and about 8 9 10 percent a year or something

01:13

like that and especially given that you don't need the money today

01:16

well you strategically almost can't afford to not be invested in equities ie [Kid holding bags of cash]

01:23

the stock market no reason to hold almost any bonds at this stage in your [Kid throwing the bonds into the bin]

01:26

life you don't need the cash you don't need the safety you don't need the

01:30

liquidity because your timeline there is endless like you probably have half a

01:34

century or more before you even begin to feel old being strategic about your

01:38

investing at this stage is the difference in compounding over say a 50

01:42

plus year period at only four or five percent or eight nine ten maybe twelve [Graph showing balances after different compound interest rates]

01:47

percent if you get a little bit lucky and at the very end when Kingdom Come

01:51

comes well the winner as you know is the one who can buy the most toys [Angel rescues rich kid]

Related Videos

GED Social Studies 1.1 Civics and Government
39794 Views

GED Social Studies 1.1 Civics and Government

Fake News
11938 Views

How do you tell fake news from real news?

Finance: What is Bankruptcy?
260 Views

What is bankruptcy? Deadbeats who can't pay their bills declare bankruptcy. Either they borrowed too much money, or the business fell apart. They t...

Finance: What is a Dividend?
1777 Views

What's a dividend? At will, the board of directors can pay a dividend on common stock. Usually, that payout is some percentage less than 100 of ear...

Finance: How Are Risks and Rewards Related?
589 Views

How are risk and reward related? Take more risk, expect more reward. A lottery ticket might be worth a billion dollars, but if the odds are one in...