What is asset allocation?

Asset allocation plays an important role in your overall investment experience. The decision of how to invest your money is a personal one. This infographic explains what asset allocation is and what the determining factors are in choosing the right mix.

Asset allocation

Asset allocation is an investment strategy that seeks to balance risk and reward by allocating assets in a portfolio based on a person’s goals, risk tolerance and investment horizon. Having different investments in different asset classes helps diversify your portfolio.

Asset classes are groups of investments with comparable risk and growth potential. Some of the common asset classes are:

Cash and cash equivalents
Equities (stocks)
Fixed income (bonds)
Alternative investments

How do you choose your asset mix?

Your goals: What are you trying to achieve by investing?
Your time horizon: How long do you plan on keeping the money invested?
Your risk tolerance: What level of volatility are you comfortable with?