Asset allocation
How you divide your investments among types like stocks, bonds and cash, based on your goals, timeline and comfort with risk.
Stocks have historically grown more over long periods but swing more. Bonds and cash usually move less but grow less. Your mix sets how bumpy the ride feels.
People with many years until they need the money often hold more stocks. As a goal gets closer, many shift toward bonds and cash. Over time, rebalancing brings your mix back to target.
Example
A $10,000 portfolio with an 80/20 allocation holds $10,000 × 80% = $8,000 in stocks and $10,000 × 20% = $2,000 in bonds.