Asset allocation refers to the division of capital into different asset classes, such as stocks, bonds, and cash. How you allocate your assets into different classes is entirely up to you, perhaps with the help of your advisors, and will likely change over time.
Factors to consider when determining your personal asset allocation, include:
- Time Horizon. How long do you need to invest to achieve your financial goal?
- Risk Tolerance. What is your appetite for risk?