GLOSSARY - EXPLANATION OF TERMS

INPUT
SHEET (model-specific definitions show

ASSET ALLOCATION
Asset allocation is an investment portfolio technique that aims to balance risk b
bonds, real estate. Each asset class has different levels of return and risk, each
is that a variety of investments will yield a higher return. It also suggests that in
rather than "putting all the eggs in one basket". The process of determining wh
different variables, including age, savings capability, time horizon and risk toler
basic guidance for a safe and effective investment policy.

BONDS

Bonds are an asset class where the investor lends a government or a corporatio
of that money plus interest. Bonds are a key ingredient in a balanced portfolio.
help balance out risks over time, being generally less volatile than stocks. If sto
work by paying back a regular amount, also known as a “coupon rate,” and are
a $10,000 bond with a 10-year maturity date and a coupon rate of 5% would pa
value of the bond is paid back to the investor.

CASH & CASH EQUIVALENTS

Cash and cash equivalents are assets that are cash or can be converted into cas
marketable securities, with maturities of less than 90 days. Examples of cash eq
Treasury bills and short-term government bonds with a maturity date of three

COMMODITIES
A commodity is a basic good used in commerce that is interchangeable with ot
Traded commodities are typically sorted into four broad categories: metal, ene
For investors, commodities can be an important way to diversify their portfolio
commodities are known to be risky investment propositions because their mar
are difficult or impossible to predict, such as unusual weather patterns, epidem
There are a number of ways to invest in commodities, such as futures contract

EMERGENCY FUND

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 An emergency fund is money set aside to pay for large, unexpected expenses (
or replacement, major car fixes, unemployment, etc.), to be kept in bank accou
For our asset allocation purposes it is a sum equivalent to one year worth of ex
investments, in proportion to the amount invested.

EQUITY

In simplest terms, equities are shares in the ownership of a company. When a c

company offers shares, on the other hand, it sells partial ownership in the com
higher returns. In your investing portfolio, your “equity exposure” is another w
when the value of the stocks you own declines. Conventional wisdom states th
will likely want more stocks in their portfolio because of their potential for retu
becomes more of a risk, which is why many people transition at least part of th

ETF - EXCHANGE TRADED FUNDS

An exchange-traded fund (ETF) is a basket of securities (such as stocks, commo
like stocks. Therefore you can buy and sell them through your bank or brokerag
passively track an index, such as the S&P 500, and to invest at a lower cost than
investor to gain exposure to a basket of equities in a specific sector or index wi
option for investors looking to diversify their portfolio in a flexible, low cost, an
suggests passive investments like ETFs tend to outperform actively managed fu
dividends. Bonds ETFs distribute interest. Many ETFs are available either in dist
interest are reinvested in the fund.

HEDGE FUNDS
Hedge funds are alternative investments that use pooled funds and employ a v
of a hedge fund is to provide the highest investment returns possible as quickly
primarily in highly liquid assets, enabling the fund to take profits quickly on one
more immediately promising. Hedge funds tend to use leverage, or borrowed m
therefore hedge funds are mostly indicated for high net worth individuals.
Hedge funds invest in virtually anything and everything—individual stocks (incl
currencies, arbitrage, derivatives—whatever the fund manager sees as offering
hedge funds is on maximum short-term profits.

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 INVESTABLE ASSETS
All assets owned excluding properties and physical assets like home, vehicles, o
and illiquid asets.

PRIVATE EQUITY
Private equity funds more closely resemble venture capital firms in that they in
companies, although they sometimes seek to acquire controlling interest in pu
frequently use leveraged buyouts to acquire financially distressed companies. U
equity funds are focused on the long-term potential of the portfolio of compan
Once they acquire or control interest in a company, private equity funds look t
streamlining operations, or expansion, with the eventual goal of selling the com
public offering in a stock market. Like hedge funds, private equity funds appeal

REAL ASSETS
Real assets are physical assets that have an intrinsic value due to their substan
commodities, real estate, land, equipment, and natural resources. They are ap
because of their relatively low correlation with financial assets, such as stocks a

REAL ESTATE INVESTMENT TRUSTS (REIT)

A real estate investment trust (REIT) is a company that owns, operates, or finan
REITs pool the capital of numerous investors. This makes it possible for individu
without having to buy, manage, or finance any properties themselves. Many RE
investors can buy and sell them like stocks throughout the trading session. The
considered very liquid instruments.

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TION OF TERMS USED (in alphabetical order)
definitions shown under red headings)

at aims to balance risk by dividing assets among major categories such as cash, stocks,
f return and risk, each behaving differently over time. The idea behind diversification
. It also suggests that investors will face lower risk by investing in different vehicles
cess of determining which mix of assets to hold in your portfolio is the results of many
e horizon and risk tolerance. This is where this model aims to assist, by providing

ernment or a corporation money for a set period of time, with the promise of repayment
n a balanced portfolio. Most investment portfolios should include some bonds, which
atile than stocks. If stock markets plummet, bonds can help cushion the blow. Bonds
“coupon rate,” and are thus referred to as a type of fixed-income security. For example,
on rate of 5% would pay $500 a year for a decade, after which the original $10,000 face

n be converted into cash immediately. Cash equivalents include bank accounts and
ys. Examples of cash equivalents include certificates of deposit, commercial paper,
maturity date of three months or less.

nterchangeable with other goods of the same type.

categories: metal, energy, livestock and meat, agricultural.
diversify their portfolios beyond traditional securities. In the most basic sense,
tions because their market (supply and demand) is impacted by uncertainties that
ather patterns, epidemics, and disasters both natural and human-made.
uch as futures contracts, options, and exchange traded funds (ETFs).

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unexpected expenses (such as: unforeseen medical expenses, home appliance repair
o be kept in bank accounts and highly liquid instruments.
o one year worth of expenses plus an extra margin to cover excess volatility in equity

of a company. When a company issues bonds it takes loans from buyers. When a
l ownership in the company. People invest in equities because of their potential for
exposure” is another way of describing your exposure to the risk that you will lose money
tional wisdom states that young people can afford more equity exposure, and therefore
their potential for returns over time. As you are planning to retire, equity exposure
sition at least part of their investments from stocks to bonds as they get older.

such as stocks, commodities, or bonds) that are similar to mutual funds but they trade
h your bank or brokerage firm just like with stocks. Investors typically buy ETFs to
est at a lower cost than mutual funds, which are actively managed. A stock ETF allows an
cific sector or index without having to purchase individual stocks. They are an excellent
a flexible, low cost, and tax efficient manner. In fact, a growing body of research
rm actively managed funds over a long time frame. Equity and Real Estate ETFs distribute
e available either in distribution or accumulation version, meaning dividends and/or

d funds and employ a variety of strategies to earn returns for their investors. The aim
urns possible as quickly as possible. To achieve this goal, hedge fund investments are
e profits quickly on one investment and then shift funds into another investment that is
everage, or borrowed money, to increase their returns. But such strategies are risky,
worth individuals.
—individual stocks (including short selling and options), bonds, commodity futures,
anager sees as offering high potential returns in a short period of time. The focus of

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 s like home, vehicles, other real estate investment properties, art, jewelry, collectibles

tal firms in that they invest directly in companies, primarily by purchasing private
ntrolling interest in publicly traded companies through stock purchases. They
distressed companies. Unlike hedge funds focused on short-term profits, private
he portfolio of companies they hold an interest in or acquire.
ate equity funds look to improve the company through management changes,
l goal of selling the company for a profit, either privately or through an initial
ate equity funds appeal mainlty to high-net-worth individuals.

ue due to their substance and properties. Real assets include precious metals,
resources. They are appropriate for inclusion in most diversified portfolios
assets, such as stocks and bonds.

owns, operates, or finances income-generating real estate. Modeled after mutual funds,
s it possible for individual investors to earn dividends from real estate investment
es themselves. Many REITs are publicly traded on major securities exchanges, and
he trading session. These REITs typically trade under substantial volume and are

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 (including quotes from: [Link]

s cash, stocks,
diversification
ent vehicles
esults of many
ssist, by providing

ise of repayment
bonds, which
e blow. Bonds
ty. For example,
nal $10,000 face

ccounts and
rcial paper,

nties that

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pliance repair

tility in equity

. When a
otential for
u will lose money
e, and therefore
ty exposure
older.

but they trade

uy ETFs to
ock ETF allows an
are an excellent
research
te ETFs distribute
ends and/or

stors. The aim

vestments are
vestment that is
gies are risky,

ity futures,
The focus of

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lry, collectibles

ng private

s, private

er mutual funds,
nvestment
nges, and
and are

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)

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 7/26/2025 ASSE

1. ENTER BASIC INFORMATION

AGE 57
MONTHLY EXPENSES 65,000
INVESTABLE ASSETS 22,384,414

3. ASSET ALLOCATION SUMMARY

CASH & LOW-RISK INVESTMENTS 49%

CASH & CASH EQUIVALENTS (Emergency Fund)
TERM DEPOSITS / CD (1 to 5 yrs)

HIGHER-RISK INVESTMENTS 51%

EQUITY 60%
BONDS 5%
REAL ASSETS 30%
HEDGE FUNDS 5%

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 ASSET ALLOCATION MODEL ©

2. ENTER EXPECTED INVESTMENTS OVER NEXT 5 YEA

2025
HOME DOWN-PAYMENT
HOME RESTRUCTURING
FURNITURE & EQUIPMENT
NEW CAR
KIDS' EDUCATION
OTHERS 8,953,766

4. ASSET ALLOCATION DETAILS >>>

10,942,766 HIGHER-RISK INVESTMENTS

10,942,766
HEDGE FUNDS,
0 5%
REAL AS-
SETS, 30%
11,441,648
6,864,989
572,082 BONDS, EQUITY,
3,432,494 5% 60%
572,082

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 © 2021 Domenico Cristarella

ENTS OVER NEXT 5 YEARS

2026 2027 2028 2029 2030

>>>

MENTS INVESTABLE ASSETS

S, HEDGE FUNDS,
REAL AS- 3%
SETS, 15% CASH &
BONDS, LOW
3% RISK, 49%

EQUITY,
60% EQUITY,
31%

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 PORTFOLIO STRUCTU

INVESTABLE ASSETS
CASH & LO 49%
EQUITY 31%
BONDS 3%
REAL ASSE 15%
HEDGE FU 3%

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ORTFOLIO STRUCTUPORTFOLIO STRUCTURING ASSET ALLOCATION

HIGHER-RISK INVESTMENTS
EQUITY 60%
BONDS 5%
REAL ASSET 30%
HEDGE FUN 5%

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 LEGEND

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 INPUT METHOD
SHEET

ASSET ALLOCATION (higher-risk investments)

Estimated max stock market loss 45%

Maximum tolerable loss 27%
% allocated to Equity Portfolio 60%

METHODOLOGY TABLE

AVAILABLE FUNDS <= 20,000 <

AGE LIMIT 50 <=
EQUITY ALLOCATION 100% 110%-AGE

EQUITY 100% 60%

ETFs / INDEX FUNDS 100% 100%
PRIVATE EQUITY 0% 0%
BONDS 0% 40%
INVESTMENT GRADE 0% 100%
> Fixed Income 0% 65%
> Inflation Protected (TIPS) 0% 35%
HIGH YIELD 0% 0%
REAL ASSETS 0% 0%
REAL ESTATE 0% 0%
COMMODITIES 0% 0%
HEDGE FUNDS 0% 0%

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 METHODOLOGY

100,000 < 200,000 > 200,000 > 1,000,000 >

> <= > <= >
60% 110%-AGE 60% 110%-AGE 60% 60%

60% 60% 60% 60% 60% 60%

100% 100% 100% 100% 100% 100%
0% 0% 0% 0% 0% 0%
40% 35% 35% 30% 30% 25%
100% 100% 100% 75% 75% 75%
65% 65% 65% 65% 65% 65%
35% 35% 35% 35% 35% 35%
0% 0% 0% 25% 25% 25%
0% 5% 5% 10% 10% 15%
0% 100% 100% 100% 100% 100%
0% 0% 0% 0% 0% 0%
0% 0% 0% 0% 0% 0%

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 3,000,000 > 5,000,000 > 10,000,000

60% 60% 60%

58% 57% 55%

90% 80% 70%
10% 20% 30%
20% 15% 10%
75% 75% 75%
65% 65% 65%
35% 35% 35%
25% 25% 25%
20% 25% 30%
95% 90% 85%
5% 10% 15%
2% 3% 5%

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 DETAILED ASSET ALLOCATION REPORT

INVESTABLE ASSETS 22,384,414 HIGHER-RISK INVESTMENTS

CASH & LOW-RISK INVESTMENTS 49% 10,942,766
> Cash & Cash Equivalents (c/a, savings, mm funds, t-bills, term deposits < 1 yr) 10,942,766 HEDGE FUNDS; 5%
REAL AS-
> Term Deposits / CD duration: 1 to 3 years 0 SETS; 30%

> Term Deposits / CD duration: 3 to 5 years 0

HIGHER-RISK INVESTMENTS 51% 11,441,648
EQUITY 60% 6,864,989
> ETFs / Index Funds 70% 4,805,492 EQUITY;
60%
BONDS; 5%
> Private Equity 30% 2,059,497
BONDS 5% 572,082
INVESTABLE ASSETS
INVESTMENT GRADE 75% 429,062
> Fixed Income 65% duration: 5 to 7 years 278,890
REAL AS- HEDGE FUNDS, 3%
> Inflation Protected (TIPS) 35% duration: 5 to 10 years 150,172 SETS, 15%
CASH &
HIGH-YIELD CORPORATE BOND ETFs/FUNDS 25% 143,021 LOW RISK,
49%
REAL ASSETS 30% 3,432,494
> Real Estate Investment Trusts (REITs) 85% 2,917,620 BONDS, 3%

> Commodities ETFs / Index Funds 15% 514,874 EQUITY,

31%
HEDGE FUNDS 5% 572,082

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 INPUT ASSET ALLOCATION
7/26/2025

INVESTABLE ASSETS
EXPECTED FUTURE CASH REQUIREMENTS
- HOME BUYING
- HOME RESTRUCTURING
- NEW FURNITURE
- NEW CAR
- KIDS
- OTHER INVESTMENTS
- EXPENSES NOT COVERED BY REVENUES
UNEXPECTED FUTURE REQUIREMENTS (emergency fund)
AVAILABLE FOR LOW-RISK (LIQUID) INVESTMENTS
AVAILABLE FOR HIGHER-RISK INVESTMENTS

CASH & LOW-RISK INVESTMENTS

CASH & CURRENT ACCOUNTS
OTHER LOW-RISK INSTRUMENTS
> Savings accounts
> T-bills, Money Market Funds, Term Deposits <1 year up to 1 year
> Term Deposits / CD 1 to 3 years
> Term Deposits / CD 3 to 5 years

ALLOCATION TO EQUITY PORTFOLIO

HIGHER-RISK INVESTMENTS
EQUITY
> ETFs / Index Funds
> Private Equity
BONDS
INVESTMENT GRADE
> Fixed Income 5 to 7 years

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> Inflation Protected (TIPS) 5 to 10 years
HIGH-YIELD CORPORATE BOND ETFs/FUNDS
HEDGE FUNDS
REAL ASSETS
> Real Estate Investment Trusts (REITs)
> Commodities ETFs / Index Funds

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ASSET ALLOCATION DATABASE
7/26/2025

49%
51%

49%

51%
60%
70%
30%
5%
75%
65%

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 35%
25%
5%
30%
85%
15%

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 22,384,414
8,953,766 2025 2026 2027
0 0 0 0
0 0 0 0
0 0 0 0
0 0 0 0
0 0 0 0
8,953,766 8,953,766 0 0
0 0 0 0
1,989,000 8,953,766 0 0
10,942,766
11,441,648
2025 8,953,766
2026 0
10,942,766 2027 0
799,500 2028 0
10,143,266 2029 0
994,500 2030 0
9,148,766
0
0

60%

11,441,648
6,864,989
4,805,492
2,059,497
572,082
429,062
278,890

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 150,172
143,021
572,082
3,432,494
2,917,620
514,874

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 2028 2029 2030
0 0 0
0 0 0
0 0 0
0 0 0
0 0 0
0 0 0
0 0 0
0 0 0

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