Investor Education: Asset Allocation

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Asset Allocation is your master plan for building and managing your investment portfolio. You decide how m...
Asset Allocation is your master plan for building and managing your investment portfolio. You decide how much to invest in different investment categories. Maybe you buy some stocks, a few bonds, a lot of cash or cash equivalents. And – this is key – how much of each you choose has a major impact on your investment return. Why? All asset classes do not behave equally. A market that produces strong stocks may be a blow to bonds. If you allocated your investments across the board, your slumping fruit stock may be offset by your chip bonds going gangbusters. Step one: Choose which asset classes you want in your portfolio. Then: Consider what percentage of your portfolio you want to allocate to each of these asset classes. And that concludes Asset Allocation 101.
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