We can call Asset Allocation as an investment strategy which aims to balance risk and reward by apportioning a portfolio's assets according to an individual's goals, risk tolerance and investment horizon.
The three main asset classes are as listed below:
- Equities
- Fixed-income
- Cash and equivalents
All above instruments have different levels of risk and return, so each will behave differently over time and one has to analyse the investment in each segment as per an individual financial goals and age factor.
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