🥧Intermediate
What Is Asset Allocation?
How you split your money across investment types
Asset allocation is the decision of how to divide your portfolio between stocks, bonds, cash, and other assets. A common rule for younger investors: hold 90% stocks, 10% bonds. As you approach retirement, shift toward bonds for stability. Your allocation should reflect your time horizon and risk tolerance.
Quick check
Why should younger investors typically hold more stocks than bonds?