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Asset Allocation Explained for Beginners When you start investing, it is natural to focus on individual investments: Which stock should you buy? Which fund should you choose? Should you invest more in bonds or keep money in cash? Before getting into those individual choices, there is a bigger question worth answering: How should your overall investment portfolio be divided? That is the basic idea behind asset allocation . Asset allocation means dividing an investment portfolio among different asset classes, such as stocks, bonds, and cash. The appropriate mix depends largely on the investor's financial goal, time horizon, and ability and willingness to take risk. Investor.gov explains that there is no single allocation that is appropriate for every investor or every financial goal. [oai_citation:0‡Investor.gov](https://www.investor.gov/introduction-investing/getting-started/asset-allocation?utm_source=chatgpt.com) Key idea: Asset allocation is not...