Diversifying your pool of money across different types of assets such as stocks, bonds, cash etc. helps you manage risk. You need to earn a decent return on your investments if you want your wealth to grow, but you don’t necessarily want to put everything on the line to do it.
Each asset class has different levels of risk, returns and liquidity. As an investor you need to consider your investment objectives, your comfort with volatility, when you’ll need the capital and how much. There are many different types of asset allocation models but they generally fall into three buckets.
Here are some guidelines to help you build the right investment portfolio for you.