Asset allocation is an investment strategy that involves distributing money across different asset classes, such as stocks, mutual funds, bonds, ETFs, and cash equivalents. The objective is to create a diversified portfolio that aligns with an investor's financial goals and risk tolerance. By spreading investments across multiple assets, investors can reduce the impact of market volatility on their overall portfolio. The ideal asset allocation depends on factors such as age, investment horizon, and return expectations. Periodic portfolio rebalancing helps maintain the desired allocation over time.
