What is asset allocation & how does it work?

Let’s begin by looking at asset allocation. Asset allocation involves dividing an investment portfolio among different asset categories, such as stocks, bonds, and cash. The process of determining which mix of assets to hold in your portfolio is a very personal one.

What is a tactical asset allocation strategy?

The tactical asset allocation strategy addresses the challenges that result from strategic asset allocation relating to the long-run investment policies. Therefore, tactical asset allocation aims at maximizing short-term investment strategies.

What are the different types of asset allocation models?

Some widely used asset allocation models include 100% bond allocation, 100% stock allocation, income allocation, balanced allocation, growth allocation, etc. How Does Asset Allocation Work? Asset allocation, as the name suggests, deals with allocating different assets, helping investors divide their wealth and build diverse portfolios.

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.