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Northstar Tax and Accounting, Snohomish County CPA company

North Star Tax And Accounting

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Asset Allocation and Acquisition Advice From North Star Tax And Accounting

Asset Allocation Depends On Risk Tolerance And Timeframe

From an investor perspective, asset allocation and acquisition is one of the most important decisions a business can make.  Whenever the decision to purchase a new asset or transfer assets from one class to another needs to be made, it is best to seek financial advice from an accounting firm with experience in that industry. Businesses need to be shown how to calculate the risk/reward ratios up against the companies goals. What is your long term investment goal? How much risk are you willing to make? What timeframe are you looking to hold the asset? 

These are all important questions a qualified business consultant specializing in accounting and bookkeeping can help you answer.

There are three main asset classes: Fixed income, Equities, Cash and equivalents

Depending on your risk tolerance, timeframe, and company goals, where to allocate assets will be different for a number of reasons.

To better understand we can use an example.  An individual that is wanting to retire in 5 years may invest in more short term investing strategies such as bonds, certificates of deposit, and low risk stocks. Due to the short nature of their investment it becomes too “risky” for that individual to invest in a small cap aggressive growth mutual fund that may ride ups And downs in the market. 

A person wanting to retire in 30 years may have a different strategy for investing.  When you have time on your side you can make riskier investments such as real estate and small cap startup stock investments. The money used in this example is not needed for many years so it can be tied up and wait out a down market whereas a 5 year plan just doesn’t have the time necessary to recover after a downturn.

Timeframe an Asset Is Held Determines Proper Risk Reward Ratio

Your business should be treated in a similar way.  If your business is looking to purchase a new asset they must look at the variables of risk, timeframe til maturity, and long term investment goals.  

North Star Tax and Accounting can help guide your business through the difficult task of asset allocation, investments, and asset purchases.

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North Star Tax and Accounting is a Quickbooks Pro Advisor
David Romano

David Romano
Tax Department

Our Team Leadership

The following team members make up the partners of North Star Tax and Accounting

Sheena Frenzel

Sheena Frenzel
Accounting Department

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    Snohomish, Wa Location

    2120 Bickford Ave, Snohomish, WA 98290


    Bellingham, Wa Location

    1334 King St Ste 2 Bellingham, WA, 98229


    425-379-8085
    info@northstartaxes.com