Asset Allocation Definition

Definition: It refers to the overall term that describes how an investor spreads his cash for investing throughout different types of investment, such as savings accounts, stocks and bonds. The main purpose for people that actively look in to asset allocation is to devise a strategy that weighs up their aims and risks so their total investment is safe yet will make a reasonably quick return.For example putting all of your money in to a savings account is safe, but returns are low. Studying asset allocation may make you change your mind into putting 80% into a savings account and the other 20% into the stock market. The most important thing is that you have to know your risk profile. When you know your risk profile, you can make asset allocation more safely.