Asset allocation is how an individual spreads his/her money over different types of investments such as equities, bonds, cash, real estate, etc.
Proper asset allocation is one of the most important factors in achieving a successful investment portfolio. Asset allocation should be determined by many factors including:
age of the investor
wealth of the investor
income of the investor
financial goals of the investor
risk tolerance of the investor
potential financial obligations of the investor
A well designed asset allocation plan can minimize risk, reduce volatility, and increase long term returns of your investment portfolio.
If you have questions about how to properly allocate your investment portfolio, consult a certified financial planner or other financial professional.