So you have spent a good hour or so with your trusted Financial Planner discussing risk, objective, time horizon and so forth. You may have had a bathroom break to give the discussion and question more thought, but ultimately the question will come: Where To Invest?

Deciding where to invest is not an easy question to answer. Unfortunately, most people rely quite heavily on recommendations from their planner. However, keep in mind  that like you, your planner will have certain biases about where to invest your money. Some planners like China, others do not. Some like mutual funds, others recommend Exchange Traded Funds (ETFs). But one thing that will not change is that you are the one who ultimately decides where to invest your funds.

With that in mind, some of the different things to consider when the question comes up is:

Asset Allocation: Deciding where to invest should be a question of asset allocation. After all, when building your asset allocation model you will likely come up with an appropriate investment plan. You will have an idea on the types of investments you need to incorporate into your portfolio.

Type of investment: While mutual funds are a natural starting point for many investors, finding one that meets your requirements is another matter. For others, specific securities will more adequately meet their guidelines. Ideally, finding the right type of investment should be a first step. Of course, you want to make sure there is little overlap in investment so that you are not being over-exposed to any given security or asset class.

Geography: Finding where a specific investment is based, either corporately or where it primarily operates is another starting point. Again, making sure that the potential investment meets your asset allocation objective is ideal in ensuring you are not over-exposing your investments to particular geographic regions or areas.

Industry/Sector: Understanding the where the potential investment earns a dime is important. For whatever reason, you may be biased for or against certain industries or sectors. Some investors with a manufacturing background might be more or less inclined to invest in specific manufacturing sectors based on their experience with their own employer. Again your asset allocation will take such things into account.

Currency Exposure. While some investments do not allow foreign currency securities, allowing yourself to be properly diversified in terms of currency risk should also be part of your asset allocation model. Companies that operate in foreign countries will present specific foreign currency risks (and diversification) based on the conversion needed to complete domestic financial statement data. While this is less of a concern for a single security within a large pool of funds, it is certainly a factor when building your own portfolio of individual securities. You can achieve currency balance through all types of investments, however, including mutual funds, bonds, specific securities, as well as forex-based ETF and other securities.

Deciding where to invest should take the above into account. Sitting down with your financial planner is normally the easiest because your planner will (or should) understand such intricacies. However, when it comes to planning out your own individual investments, you would be served by starting a spreadsheet that can be categorized and color-coded to ensure you are not just looking at where places to invest but the right places to invest.

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