Definition

Asset allocation is the mix of asset classes in your portfolio and is the single biggest driver of long-term risk and return. A common guideline shifts from mostly stocks when young toward more bonds near retirement, so the portfolio is more stable when you need to draw on it. The right mix depends on your time horizon and risk tolerance.

1. Asset Allocation by Age: What the Research Actually Says

   The classic "100 minus your age" rule for stock-bond allocation has not aged well. Here is a more nuanced approach based on your timeline, risk tolerance, and income sources.
   investing

1. Diversification

   Spreading money across many investments so no single loss sinks you.
2. Rebalancing

   Periodically resetting your portfolio back to its target mix.
3. Risk Tolerance

   How much investment ups and downs you can handle, financially and emotionally.