The next step to understanding the fundamentals of investing is to examine the process of spreading your money across the different types of investments in order to meet your investment objectives.
Asset allocation is one of the key ingredients for a successful investment strategy.
There are a category of assets, such as equities, bonds, cash or even property. Investments within an asset class have similar characteristics.
With an understanding of your investment goals, time frame and risk, you can work with your financial adviser to begin to create an asset allocation that is suitable for your portfolio. Asset allocation simply means deciding how to spread your money across the different asset classes (including equities, bonds, property and cash) and how much you want to hold in each. It also means selecting a mix of asset classes that reflects your actual investment objectives, time frame and attitude to risk.