What is asset allocation?

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8 years ago

Asset allocation is the process of choosing or allocating money to different types of investments, with the goal of creating a diversified and “efficient” portfolio. A diversified and efficient portfolio seeks to minimize volatility risk for a given level of return, or maximize return for a given level of volatility risk. Diversification and asset allocation don’t eliminate volatility risk, but can reduce risk relative to less diversified portfolios for a given stock/bond mix.

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