Asset Allocation
How you divide a portfolio among stocks, bonds and cash — the biggest driver of long-term risk and return.
What does asset allocation mean?
Allocation matters more than picking individual investments. A longer time horizon supports more stocks; as a goal nears, you shift toward bonds and cash to protect against a downturn.
Put it to use
Asset Allocation Calculator Your age, ability to tolerate risk and several other factors are used to calculate a desirable mix of stocks, bonds and cash. Investment Questionnaire - Broad Portfolio The Investment Questionnaire is designed to help you create a balanced portfolio from a broad range of investment classes.
Related terms
Asset Allocation — frequently asked
How should I split stocks and bonds by age?
A classic rule of thumb is to hold roughly (110 − your age)% in stocks and the rest in bonds, so a 40-year-old might hold about 70% stocks. Adjust for your risk tolerance and time horizon rather than following it rigidly.
How often should I rebalance my portfolio?
Once a year, or whenever an asset class drifts more than about 5% from its target, is plenty for most investors. Rebalancing sells what has grown and buys what has lagged, keeping your risk level steady.