GLOSSARY TERM
Asset Allocation
Asset allocation means how you divide your money between different types of investments, such as stocks, bonds and cash.
What does this mean in practice?
Instead of putting all your money into one place, you spread it across different asset types. The mix you choose affects both your potential return and your level of risk. A portfolio with more stocks may grow more over time, but it can also rise and fall more. A portfolio with more bonds or cash is usually steadier, but its long-term growth may be lower.
Example
A simple portfolio could be 80% stocks and 20% bonds. Another person might choose 60% stocks and 40% bonds if they want less risk and smaller ups and downs.
Why it matters
Asset allocation is one of the biggest factors shaping long-term results. It helps match your investments to your goals, time horizon and ability to handle market swings.
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