Asset allocation is a way to reduce your risk by investing your portfolio into different type of assets.
A broad way to do this is to split your portfolio into different asset classes, assigning a percentage of your portfolio to each i.e. 60% stocks, 20% bonds, 10 % real estate and 10% cash. From there you can become more specific i.e. of the 60% allocated to shares, 40% will be invested into international shares with 20% invested into domestic shares.
Please know, the value of investments can go up as well as down and you may receive back less than your original investment, meaning, when investing your capital is at risk.
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