Asset Allocation : A Strategy for Investment Success
In today’s complex financial markets, you can select from an impressive array of investment vehicles. Each investment also carries some risks, making it important to choose wisely if you are selecting just one.
The good news is that there’s no rule that says you must stick with only a single type of investment. In fact, you can potentially lower your investment risk and help increase your chances of meeting your investment goals by practicing "asset allocation."
What Is Asset Allocation?
Asset allocation refers to the way in which you weight investments in your portfolio in order to try to meet a specific objective. For instance, if your goal is to pursue growth (and you’re willing to take on market risk in order to do so), you may decide to place 20% of your assets in bonds and 80% in stocks.
The asset classes you choose, and how you weight your investment in each, will probably hinge on your investment time frame and how that matches with the risks and rewards of each asset class.