Finance Glossary

Getting your Assets in the Right Place

Getting your Assets in the Right Place

In investment strategy, asset allocation refers to choosing how much of your portfolio to dedicate to different asset classes. Asset allocation must be customized for the individual investor, and will depend on one’s goals, risk tolerance and time horizon. The way assets are distributed is considered one of the key aspects to successful investing and financial planning. It is generally a good idea to have a mixed portfolio with different types of assets.

The three main recognized types of assets are stocks (or equities), bonds (fixed income assets), and cash. Cash includes cash equivalents such as certificates of deposit. Real estate is also sometimes considered to be a fourth category. Each type of asset is associated with different levels of risk and time frame. In general, stocks are better for long-term investments (of five years or more) since a longer time frame allows an investor to ride out short-term fluctuations in the market and gain potentially higher rewards. Cash and money market accounts are good for short-term goals a year or less away, such as a vacation or a new car. Bonds, which usually have slower growth than stocks, generally fall somewhere in between. Risk tolerance also plays an important role in deciding asset allocation: a person may decide to put more money in bonds than in stocks because they are risk adverse and do not want to worry about losing money in the market.

 

RT @elerianm: .@businessinsider @pdacosta on this week's policy meetings of the US @FederalReserve #Fed" title="https://t.co/4S3Ex51jI1 #Fed" >... #economy
RT @DeutscheBank: US labour market data in November better than expected – consumers expecting inflation to kick in. Will the #Fed raise in…
RT @CreditSuisse: Inspiring company presentations during #CSPIC e.g. by Samuel Halim, co-founder and CEO of @goavantama, Matthias Vanoni, c…
Every day brings new choices. - Martha Beck
Adopting the right attitude can convert negative stress into a positive one. - Hans Selye
Find a place inside where there's joy, and the joy will burn out the pain. - Joseph Campbell
RT @blackstone: In Great Company: @Bloomberg looks at how $BX, @GoldmanSachs, & @Blackrock are shaping the future of investing: ...
RT @Chase: Now Playing ▶️ @JonBatiste at the #ChasePay Village at #WestfieldWTC! You won’t want to miss this 🎶 ...
RT @DeutscheBank: As #Bitcoin hits $15,000, Deutsche Bank #WealthManagement report examines cryptocurrencies, #blockchain​s and their impor…
Love is that condition in which the happiness of another person is essential to your own. - Robert A. Heinlein