What makes a good asset allocation plan?

Keep in mind that an asset allocation plan involves more than just stocks and bonds. Within the stock allocation, for example, one may consider geography (U.S. vs. international stocks), market capitalization (small companies vs. large companies) , and alternatives (e.g., real estate and commodities).

What is asset allocation?

Asset allocation is how investors divide their portfolios among different assets that might include equities, fixed-income assets, and cash and its equivalents. Investors ordinarily aim to balance risks and rewards based on financial goals, risk tolerance, and the investment horizon.

What is a good asset allocation model?

We can divide asset allocation models into three broad groups: Income Portfolio: 70% to 100% in bonds. Balanced Portfolio: 40% to 60% in stocks. Growth Portfolio: 70% to 100% in stocks. For long-term retirement investors, a growth portfolio is generally recommended. Whatever asset allocation model you choose, you need to decide how to implement it.