Asset Allocation
InvestingThe strategy of dividing investments among different asset categories like stocks, bonds, and cash to manage risk.
Example
Example: If you are building a $100,000 investment portfolio, asset allocation directly affects your strategy and returns. This concept — the strategy of dividing investments among different asset categories like stocks, bonds, and cash — influences decisions about what to buy, when to sell, and how to manage risk. Understanding it can mean the difference between strong long-term performance and costly mistakes. Model your portfolio with our investment calculator.