asset allocation
4 questions
- Finance
How do I diversify my investment portfolio?
Diversification means spreading your money across different asset types, sectors, and geographies so that no single investment can wipe out your portfolio. In practice, two or three low-cost index funds covering US stocks, international stocks, and bonds are enough for most investors.
- Finance
How do I rebalance my investment portfolio?
Rebalancing means selling assets that have grown above your target allocation and buying those that have fallen below it, returning the portfolio to its intended risk level. Annual rebalancing is optimal for most investors — more frequent rebalancing costs money without adding meaningful benefit.
- Finance
What is a target-date fund?
A target-date fund is a single fund that automatically shifts from aggressive (mostly stocks) to conservative (more bonds) as you approach a chosen retirement year. Pick the fund with the year closest to when you plan to retire and it handles the rest.
- Finance
What is risk tolerance in investing?
Risk tolerance is your ability and willingness to endure investment losses in exchange for the chance of higher returns. It determines how much of your portfolio should be in stocks (higher risk, higher return potential) versus bonds (lower risk, lower return potential).