What do you mean by Asset Allocation ?
Asset Allocation is the implementation of an investment strategy that attempts to balance risk versus reward by adjusting the percentage of each asset in an investment portfolio according to the investor's risk tolerance, goals, and investment time frame. The focus is on the characteristics of the overall portfolio. Such a strategy contrasts with an approach that focuses on individual assets. The specific allocation of assets within a portfolio depends on factors such as the investor's age, financial goals, risk tolerance, and investment timeframe. A younger investor with a long time horizon may have a higher allocation to stocks for potential growth, while an older investor nearing retirement may have a more conservative allocation with a higher proportion of bonds and cash equivalents for capital preservation. Regular reviews and adjustments to asset allocation are often necessary to maintain the desired risk-return profile as market conditions and personal circumstances change over time.
How to Calculate Asset Allocation?
Asset Allocation calculator uses Asset Allocation = 100-Age of the Individual to calculate the Asset Allocation, Asset Allocation involves dividing the investments among different assets, such as stocks, bonds, and cash. Asset Allocation is denoted by AA symbol.
How to calculate Asset Allocation using this online calculator? To use this online calculator for Asset Allocation, enter Age of the Individual (A) and hit the calculate button. Here is how the Asset Allocation calculation can be explained with given input values -> 75 = 100-25.