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Asset Allocation
The percentages of a money collection placed into different types of holding.
Example
Zara splits $100 into $60 across companies, $30 in loans to governments, and $10 in a bank account. Her split is 60%, 30%, and 10%.
How it fits in
Asset allocation describes the mix, not whether the mix is right. The same allocation can affect two people differently because their goals, time horizons, access needs, and capacity for loss differ. Categories can also hide overlap or different risks. Test the mix against more than one possible outcome and state that a classroom example is not personal advice.
Where this is taught
Related terms
When the money you earn from saving starts earning its own money on top.
Interest paid only on the original amount, never on the interest you have already earned.
Needs are the things that keep you safe and well. Wants make life nicer. Mixing them up is what empties most budgets.