Final answer:
Proper asset allocation involves strategically distributing investments among different asset classes to optimize risk and potential returns. It can increase wealth over time and does not directly decrease assets or increase expenses.
Step-by-step explanation:
Proper asset allocation refers to the strategic distribution of investments across different asset classes, such as stocks, bonds, and cash, based on an individual's or organization's financial goals, risk tolerance, and time horizon. It aims to optimize the balance between risk and potential returns.
Option A) Increase your wealth: Proper asset allocation can indeed increase your wealth over time. By diversifying investments and taking into account the risk-return tradeoff, you can potentially maximize long-term returns while minimizing the impact of market fluctuations.
Option B) Decrease your assets: Asset allocation does not directly decrease your assets. It is a method to manage and allocate your existing assets to achieve better financial outcomes.
Option C) Increase your dividend income and decrease your interest income: Asset allocation does not directly affect the allocation of dividend income or interest income. These factors are influenced by specific investment decisions within each asset class.
Option D) Increase your expenses: Asset allocation does not increase your expenses. It is a strategy to optimize your investments and financial resources.