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Asset Allocation

Asset allocation is how you split your money across asset classes like stocks, bonds, and cash.

Why this matters

Your allocation is one of the biggest drivers of risk and return. It shapes how bumpy your journey feels.

Simple example

A beginner portfolio might be 70% stocks, 25% bonds, and 5% cash.

Common mistakes

  • Copying someone else’s allocation without considering your own goals.
  • Changing allocation every time headlines get scary.
  • Holding too many similar assets and calling it diversified.

Related terms

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Frequently Asked Questions

What does Asset Allocation mean?

Asset allocation is how you split your money across asset classes like stocks, bonds, and cash.

Why does Asset Allocation matter?

Your allocation is one of the biggest drivers of risk and return. It shapes how bumpy your journey feels.

What is a simple example of Asset Allocation?

A beginner portfolio might be 70% stocks, 25% bonds, and 5% cash.

What is a common mistake with Asset Allocation?

Common mistakes include: Copying someone else’s allocation without considering your own goals. Changing allocation every time headlines get scary. Holding too many similar assets and calling it diversified.