Asset allocation describes how a portfolio is divided among categories of investments. It gives individual holdings a wider context: each is part of a plan rather than a decision made in isolation.
Begin with the goal
Consider what the money is for and when you may need it. A longer horizon can give investments more time to recover from volatility, but it does not eliminate the possibility of loss.
Understand the trade-offs
Shares, bonds and cash behave differently and carry different risks. Shares can be volatile; bonds can lose value, including when interest rates rise; and cash can lose purchasing power to inflation. No mix is suitable for everyone.
Consider the whole picture
Your income, emergency savings, debts and other investments all matter. A portfolio that looks balanced on its own may represent only part of your overall financial exposure.
Review when life changes
A change in goals, time horizon or financial circumstances can be a reason to revisit your allocation. Separate that decision from reacting to a short-term market move.
This article is for general education only and is not personalised financial advice. Investments can lose value. Consider your circumstances and seek professional advice if appropriate.
← Explore all insights