Quick Answer: What Is Asset Allocation Strategy?

What is the best asset allocation strategy?

Your ideal asset allocation is the mix of investments, from most aggressive to safest, that will earn the total return over time that you need.

The mix includes stocks, bonds, and cash or money market securities.

The percentage of your portfolio you devote to each depends on your time frame and your tolerance for risk..

What are asset allocation strategies?

Asset allocation is the implementation of an investment strategy that attempts to balance risk versus reward by adjusting the percentage of each asset in an investment portfolio according to the investor’s risk tolerance, goals and investment time frame.

What does asset allocation mean?

Asset allocation involves dividing an investment portfolio among different asset categories, such as stocks, bonds, and cash. … The asset allocation that works best for you at any given point in your life will depend largely on your time horizon and your ability to tolerate risk.

What is asset allocation Why is this used?

Asset allocation is an investment portfolio technique that aims to balance risk by dividing assets among major categories such as cash, bonds, stocks, real estate, and derivatives. Each asset class has different levels of return and risk, so each will behave differently over time.

How do you decide on asset allocation?

On top of that, the right asset allocation can also give you better returns.Identify your objectives and time horizon. … Assess your risk tolerance. … Identify your target portfolio. … Select your investments. … Review and rebalance.

What’s the best asset allocation for my age?

For years, a commonly cited rule of thumb has helped simplify asset allocation. It states that individuals should hold a percentage of stocks equal to 100 minus their age. So, for a typical 60-year-old, 40% of the portfolio should be equities.