What is asset allocation?
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In short: How you split investments between shares, bonds, cash and other assets. Younger long-term investors often hold more equities; those nearing retirement may increase bonds and cash to reduce volatility.
Last reviewed:
Reviewed by Kaiser Khan
Asset allocation drives most portfolio return variation — more than individual stock picking.
Rebalancing yearly keeps your mix near target after market moves.
Pension and ISA wrappers do not change the allocation decision — only the tax treatment.
Primary source: moneyhelper.org.uk/en/savings/investing
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