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Asset allocation is how you divide your investments among different types of assets like stocks, bonds, and cash.
In Depth
This strategy is based on the idea that different asset types perform differently over time. By spreading your money across various assets, you aim to reduce risk and improve returns. Your personal asset allocation usually depends on your age, financial goals, and how comfortable you are with risk. It's a key part of building a diversified investment portfolio.
Example
A younger investor might have an asset allocation of 80% stocks and 20% bonds, while someone nearing retirement might choose 40% stocks and 60% bonds.