How To Guide For: Understanding Asset Allocation

Asset Allocation is the process of deciding how to divide your investment dollars across several asset categories. Stocks, bonds, and cash or cash alternatives are the most common components of an asset allocation strategy. The goal of asset allocation is to minimize volatility while maximizing return. Asset allocation alone can't ensure a profit or eliminate the risk of a loss. Asset allocation is similar to diversification (which is the practice of spreading money among different investments to reduce risk). Asset allocation is a key concept in financial planning and investment management and is the driving force behind Modern Portfolio Theory (MPT). To get more in depth information on Asset Allocation and how it works click on the pictures below to read the articles.