Financial Terms / A - B / Asset allocation

Asset allocation

Asset allocation is the strategy of allocating your investments across different assets, such as stocks, bonds, real estate, gold, cash, and so on, based on an individual's risk and reward parameters.

In simple terms, the asset allocation process is used to decide what portion of your investments you want to put in each asset bucket and for how long based on variables such as age, the number of dependents, time horizon, risk appetite, and so on.