Briefly Discuss The Purpose Of The Study And Briefly Present Your Conclusion

Asset Allocation Decisions
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Abstract
In making decisions on asset allocation, it is necessary to take into account the risk and returns relationships. Additionally, there is a need to focus on income and growth potential with the bond mutual funds and money market funds being the two options. Even though, the money market funds are associated with low returns, they are mostly a safe bet. However, the returns may be too low to cushion the investor for a likely rise in the interest rates. Diversification was a critical element to spreading risks, in an environment where there are more economic uncertainties more than ever before. The proposal highlights allocating more funds to the bonds mutual funds that will provide income and higher returns.

Introduction
The portfolio management process is related to asset allocation conducted with the aim of distributing investment wealth (Reilly & Brown, 2012). There are different risk/ return relationships depending on the choice of securities invested. Risky assets have higher returns potential, with the effect of compounding, but the risk exposure means that there is no guarantee to get the expected outcomes. When making asset allocation decisions, it is necessary to take into account the investors’ objectives and constraints (Reilly & Brown, 2012). The proposed asset allocation is 30% of the money market funds and 50% for the bond mutual funds, while living the other 20% in the retirement plan. The investment decision will focus on evaluating the decision of investing in the bond mutual and money market funds, which are the preferences for the investor.
Literature Review and Discussion
There is a need to maintain a balance between investment growth and protection of the funds. The rationale for the retiree should consider living a 20% of the funds in the retirement fund is that it offers protection. There is an assumption that she will be able to live off her retirement funds to meet daily costs, but she will also require to expand the portfolio that would be adequate for the next 10 to 20 years. Additionally, having already placed resources into funds, the case for expansion is that it will provide extra funds to cater for any unforeseen emergencies. The element of speculation and investment in higher growth funds is one option that supports the growth objective.
The money market funds are associated with low returns compared to corporate debt issues and stocks since their risk are also low in choosing this option, the investor faces benefits and challenges to marinating an adequate asset growth strategy. Given the volatility in the stock market, this option is viable and the money market fund is a safe haven. Having already retired, the investor is not overly focused on aggressively growing wealth. As such, the low-risk money market funds are considered, and this includes investments in treasury bills (T-bills), certificate of deposits (COD) and the short-term commercial papers.
Macey (2011), focuses on the money market mutual funds relate to short-term capital markets, highlight that regulatory frameworks may influence their systemic risk. The money market allows investors to preserve the principal, an...