Asset allocation is the process of dividing one’s resources among many different choices. In terms of investments, “assets” refers to investible cash, and “choices” refers to investments that are available to purchase. Asset allocation refers to the percentage of an investment portfolio that is contained in each individual investment.
For example, a portfolio’s asset allocation may be 80% stocks, 15% bonds, and 5% gold. No matter the actual allocation, the primary goal of asset allocation is diversification. Diversification means spreading investment risks over many different asset classes, so that “not all your eggs are in one basket.”
To learn more about asset allocation and the process to choose the asset allocation that best fits the needs of you as an investor, download our free white paper pdf below.
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