What is Asset Allocation?
Asset allocation is the strategic distribution of investments across asset classes — equities, bonds, gold, real estate, cash — the single most important decision affecting portfolio returns.
Formula
Common rule of thumb: Equity allocation = 100 - Your Age. But personalize based on goals, risk tolerance, and time horizon.
How to Interpret
Studies show asset allocation explains 90%+ of portfolio return variation over time. Getting the equity-debt-gold split right matters more than individual stock picking.
Typical Ranges
Aggressive (age 25-35): 70-80% equity. Balanced (35-50): 50-65% equity. Conservative (50+): 30-45% equity.