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Definition: Asset allocation is the division of one's money among different assets. For example, it would be dividing your money among stocks, bonds, mutual funds, and cash. When people talk about "portfolios", they often mention the asset allocation.
TeenAnalyst Advice: It's important to spend time considering your asset allocation. Remember: don't put all your eggs in one basket.
The rule of thumb is that the younger you are, the more aggressive you can be with your investments (meaning more stocks and less bonds). But as you near retirement, you should be moving your investments into more stable vehicles like bonds and money market funds.
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