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Portfolio Allocation for Affluent Investors – PillarWM

As a high net worth or ultra-high net worth investor, you know that investing is no simple task. There are various vehicles to choose from, and many factors determine the amount of growth or risk that comes with these investments. A good portfolio allocation can ensure that your assets remain secure and continue to flourish. A financial expert is well versed in these matters, and with such high stakes, you want to make sure you hire the best of the best. For this purpose, we have an exclusive offer for families with a net worth of more than 10 million dollars. You can purchase our Ultimate Guide to finding the best financial advisor for free!

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7 Secrets To High Net Worth Investment Management, Estate, Tax and Financial Planning

The insights you’ll discover from our published book will help you integrate a variety of wealth management tools with financial planning, providing guidance for your future security alongside complex financial strategies, so your human and financial capital will both flourish.

Clients frequently share with us how the knowledge gained from this book helped provide them tremendous clarity, shattering industry-pitched ideologies, while offering insight and direction in making such important financial decisions.

Our wealth managers at Pillar Wealth Management are experienced in dealing with high-value assets and allocating them according to our clients’ individual needs and goals. We offer one of the best wealth management services to investors with liquid assets worth 5 million to 500 million dollars. To get in touch with our team, you can book a free consultation with us today!

What is Meant by Portfolio Allocation?

Your portfolio is a collection of your financial investments with stocks, bonds, and cash, at its core, along with other investment vehicles. The allocation of these assets and determining which combination of assets to keep in your portfolio is known as asset allocation or portfolio allocation.

Your investment portfolio is divided depending on your time horizon, ability to take a risk, and your financial plan. With a longer time horizon, you have the opportunity of taking risks with volatile investments that require you to wait out slow economic cycles. Shorter time horizons work better will reliable, low-risk investments.

Similarly, if you have a high-risk tolerance, you have the potential of being rewarded with a greater return. If you’re not an aggressive investor, you might want to invest solely in cash investments. Now, how do you know which one is right for you? That is where a portfolio manager or wealth manager comes in. If you would like to get in touch with one of our experienced wealth managers, book a consultation with us today!

Which are the most common investment choices?

An array of investment products are available to choose from, such as cash, stocks, municipal bonds, corporate bonds, mutual funds, U.S. treasury securities, and exchange-traded funds. However, the most major asset categories that make a good investment strategy are cash, stocks, and bonds. Let’s discuss why.

– Cash: Cash and cash equivalents are safe, low-risk, but low-return investments. This asset category includes money market deposit accounts, certificates of deposits, savings deposits, and money market funds. The only concern that can arise is inflation risk, which can outpace and erode investment returns over a period of time.

– Stocks: Contrastingly, stocks have a high risk and high return potential. They offer the most potential for growth but are very volatile, making them a risky investment for short term goals. Long term investors are rewarded strong positive earnings over a long period of time if they are able to withstand the volatility of stocks.

– Bonds: Bonds offer more modest returns and are less volatile than stocks. Specific categories of bonds, such as high-yield or junk bonds, provide high returns but also come with a higher risk.

As wealthy investors, you likely have multiple high-value assets in the form of realestate, precious jewelry, artifacts, and other commodities. You can include these asset categories in your portfolio allocation, but remember to understand the risk of any investment before you make a decision. Protecting your assets should be your first priority, and you should understand the liabilities that can threaten your wealth. Our book, The Art of Protecting Ultra-High Net Worth Portfolios and Estates – Strategies for Families Worth $25 Million To $500 Million., highlights some vital points for you to consider when safeguarding your wealth.

6 Successful Asset Allocation Strategies

Asset allocation is the process of distributing funds into separate asset classes to build a diversified, balanced portfolio with a mix of stocks, bonds, mutual funds, ETFs, and other investments.

Here are six successful asset allocation methods.

1. Strategic Allocation    

Strategic asset allocation assigns asset classes based on the investor’s objectives, time horizon, and risk tolerance and on the expected rates of return for each asset class. The portfolio is rebalanced periodically when the returns differ from the initial expectations. This is typically a buy-and-hold strategy.

2. Constant-Weighting Allocation

With this approach, portfolio rebalancing is ongoing, typically when an asset class moves 5% from its original allocation. Then, if an asset declines in value, you buy more, and if it increases in value, you sell it.     

3. Tactical Allocation

This strategy is applied to short-term investment and overcomes some of the weaknesses of strategic allocation by adding flexibility in responding to the market. The asset mix is rebalanced once short-term returns are achieved.

4. Dynamic Allocation

With this strategy, the asset mix is constantly adjusted according to changes in the economy and as markets rise and fall. Declining assets are sold and increasing assets are purchased.              

5. Insured Allocation

Insured asset allocation allows investors to completely avoid risk. With this strategy, a base asset value is set, below which the investor realigns the strategy to avoid losses. Active asset management is used to determine when to buy, sell, or hold securities.

6. Integrated Allocation

Integrated asset allocation considers both profit expectations and risk in creating the asset mix. This strategy focuses on actual changes in the markets.

How Do Wealthy Investors Benefit from Allocating Their Portfolio?

Building wealth is one of the main goals of affluent investors. High net worth and ultra-high net worth investors tend to engage in a broad spectrum of assets as strategies to help them outpace the profits of the average investor. Theirportfolio allocation requires more attention and care in order to make the most profitable investment decisions.

Moreover, affluent investors typically have assets spread across many investment vehicles, with everything from stocks and cash, to real-state and private equities. Managing all of these and investing them in the right places can be tricky. That is why most high net worth and ultra-high net worth investors enlist the help of a portfolio manager or a wealth manager.

Professionals who are familiar with high-value assets and who can understand the goals of rich investors can help optimize your portfolio for maximum growth. You can learn more about this in our guide, which highlights five critical shifts you can make to your portfolio. Allocating your portfolio helps you be on track with your short-term and long-term financial goals, and it protects your assets when you invest wisely.

Hiring a professional to monitor your portfolio and allocate your assets after careful consideration will help you sustain your money for your future without compromising your living standards. A solid investment portfolio will help you withstand any changes brought about due to life circumstances such as accidents, lawsuits, death, or unemployment. This enables you to stay in control of your financial status through thick and thin. If you want to secure your assets and gain insights from a financial advisor from our team, book a meeting with us.

portfolio allocation

Getting Started on Portfolio Allocation

When you begin your investment journey, you might think, “What is a reasonable portfolio allocation?” For wealthy investors, the answer is more complicated.

Many high net worth and ultra-high net worth investors prefer leveraging alternative assets such as real estate, hedge funds, venture capital, private equities, and other commodities and tangible assets. These types of assets outperform the stock market and are less volatile, but only wealthy investors have the capital to purchase them in the first place.

Moreover, they partake in private market investments more than public markets since they have less competition and much greater growth potential.They offer a higher degree of control, stable income production, and diversification, which are crucial in creating a strong portfolio. Using long-term strategies by investing in asset classes that have a history of performing well helps high net worth investors build more wealth.

Rather than making a hasty decision and investing in the wrong assets, we advise that you seek advice from a professional who knows their way around the market. Wealth management or investment management is not a one-time consultation. It requires constant maintenance and analysis to ensure that your wealth is secure and your portfolio performs according to your goals. That is why you need an advisor who understands your financial plan and can reflect the changes and modifications you want into your financial portfolio.

Can Portfolio Management Services Help?

Portfolio management services use strategies and methods such as capitalization weighting and dividend weighing to improve your portfolio’s performance. However, the question remains, how do you allocate a portfolio to enhance its performancesafely? Our Performance Guide can help you answer this question.

Portfolio management can help you analyze your investment parameters, return expectations, and risk tolerance. They carry out stress tests to detect potential threats and repair your portfolio if it is not performing well enough to help you reach your goals. Since different asset classes perform independent of the economic climate, your assets need to be allocated thoughtfully.

Diversifying your portfolio allocation is useful since it fortifies a sufficient amount of your assets, allowing you to invest more freely in other vehicles. The ideal combination of assets will yield a higher return and protect you from heavy losses. A financial professional will know which investments are suitable for your financial profile, but choosing the right person to trust can require extra effort. Our guide is specifically geared to help ultra-high net worth families choose the best financial advisor.

Another crucial aspect of asset allocation is rebalancing and revaluating your portfolio regularly to examine its strengths and weaknesses. This way, you can make changes to your life and financial goals, knowing that your portfolio will be adjusted to meet your unique needs. The changes made to your portfolio depend on the deviations observed in your expected returns.

What is the Best Kind of Portfolio Allocation?

There are many allocation models that use different investment strategies to generate capital returns. This may lead you to wonder, “What is a reasonable portfolio allocation?” To understand this, we must first understand the main types of portfolios based on these models.

1. Income Portfolio

This type of allocation carries minimal risk and is suitable for short term or mid-range time horizons. It consists of dividend-paying stocks and coupon-yielding bonds. Hence, it typically follows the ratio of 70 to 100% in bonds.

2. Balanced Portfolio

With some fluctuations, balanced asset allocation provides moderate growth and invests in both stocks and bonds. This type of allocation model is what is considered a moderate portfolio allocation. A moderate portfolio can promise average annual returns of 7-8%, with the highest gains going up to 20-30% and a decline of 20-25%.

3. Growth Portfolio

Consisting mainly of stocks, this type of portfolio allocation has long-term potentials with more fluctuations and risk. This is more ideal for investors who want high-rewards over a long period of time and are willing to take more risks. Hence, it typically follows the ratio of 70 to 100% stocks.

High net worth and ultra-high net worth asset allocation is often more aggressive than the average investors with the aim to generate higher returns. However, this does not dismiss the importance of intelligent investing. We recommend a 60/40 allocation in high-risk to low-risk investments to ensure your portfolio performs well and is less volatile during downturns.

A healthy portfolio allocation is what will protect you from unpredictable market volatility. Equities rise and fall in value, but cash and bonds are more stable, therefore, an optimized asset allocation can strengthen your financial security. Not all financial advisors are equipped or knowledgeable enough to cater to the needs of wealthy investors. That is why we recommend that you do some research and look into your financial advisor’s credentials and qualifications before you commit to one. Our Ultimate Guide can help you through this process.

Enlisting Our Services

At Pillar Wealth Management, we are skilled in taking practical steps to boost your portfolio performancewhile protecting your assets and securities. We have over sixty years of experience in the wealth management of clients with 5 million to 500 million dollars in liquid assets, which includes monitoring and adjusting their portfolio allocation. We can create a fully customized portfolio for your needs, goals, and objectives to help you achieve true financial serenity. Contact us to get the most out of our investment management services!

Frequently Asked Questions

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The best asset allocation for you depends on many factors, including your income expectations and risk tolerance. Time horizon is also important.

The 5% rule states that an investor should never allocate more than 5% of their funds to a single investment.

Different types of asset allocation are strategic, tactical, dynamic, and insured.

The ideal portfolio allocation depends on the investor’s economic expectations, time horizon, and risk tolerance.

One version of this rule says to invest in the 20% of stocks that earn 80% of the market’s returns. Or invest 80% in bonds and 20% in growth stocks.

The 4% rule says not to spend more than 4% of your portfolio each year that you are retired, which means you need to save about 25 times your income needs before retirement.

No investments are 100% safe, but some safer ones include bonds, CDs, and savings accounts.

The least risky portfolio includes cash, bank accounts, money market accounts, CDs, and bonds.

The safest investments are cash or cash equivalents, bonds, and CDs.

Over the last 100 years, the stock market has yielded a 10% return for investors.


To be 100% transparent, we published this page to help filter through the mass influx of prospects, who come to us through our website and referrals, to gain only a handful of the right types of new clients who wish to engage us.

We enjoy working with high net worth and ultra-high net worth investors and families who want what we call financial serenity – the feeling that comes when you know your finances and the lifestyle you desire have been secured for life, and that you don’t have to do any of the work to manage and maintain it because you hired a trusted advisor to take care of everything.

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