What is asset allocation?

Asset allocation is how investors divide their portfolios among different assets that might include equities, fixed-income assets, and cash and its equivalents. Investors ordinarily aim to balance risks and rewards based on financial goals, risk tolerance, and the investment horizon.

What is your ideal asset allocation?

Your ideal asset allocation is the mix of investments, from most aggressive to safest, that will earn the total return over time that you need. The mix includes stocks, bonds, and cash or money market securities. The percentage of your portfolio you devote to each depends on your time frame and your tolerance for risk.

What is a good asset allocation strategy?

Historically, an asset allocation of 60% stocks and 40% bonds was considered optimal. However, some professionals say this idea needs to be revised, particularly given the poorer performance of bonds in recent years, and say other asset classes should also be introduced to portfolios. What Is the Best Asset Allocation Strategy for My Age?