3 Key Considerations to Perfect Your IRA Asset Allocation

If you've started an individual retirement account (IRA) and contribute to it regularly, you're already setting yourself up for success. If you contribute the max each year, you're doing even better. Once you've gotten the behavior down, though, it's time to start learning about asset allocation. Asset allocation is, simply put, diversifying your investments by holding different investment vehicles (e.g. stocks, bonds, real estate, cash, or commodities). There are three important factors to consider when determining how to diversify your IRA.

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An investing horizon is the amount of time you have before you need the money in your investments. Investing horizons can be anywhere from 10 years if you're growing a college fund to 40 years if you're saving for retirement. If your horizon isn't your planned retirement age, you should be saving in a non-retirement account so you don't pay withdrawal penalties.

Source Fool.com