Investing · 3 min read
Asset Allocation Basics
Asset allocation is how you split money across equity, debt, gold, and cash. It drives most of your long-term outcome.
Why it matters
Research suggests allocation matters more than individual stock picks.
Advantages
- Controls risk
- Aligns portfolio with goals
- Reduces panic-selling
Risks
- Wrong allocation for age can hurt returns
- Neglecting to rebalance
Real-world example
A 30-year-old might hold 70% equity, 20% debt, 10% gold; a 60-year-old might reverse the equity/debt weights.
Key takeaways
- Match allocation to horizon and risk tolerance
- Rebalance yearly
- Age is one input, not the only one
Quick quiz
1. What is the main goal of rebalancing?