The key things that determine how your assets should be allocated are your goals, timeframe, risk tolerance, and financial situation. Your asset allocation should reflect all these factors and balance risk and return potential accordingly. Taking all these factors into consideration will help ensure that you don’t wind up with an allocation that's too conservative or aggressive.

What’s more, as your goals, timeframe or financial situation change, so should your asset allocation. For example, as you near retirement, your assets should gradually shift to a more conservative allocation, oriented more toward capital preservation rather than growth.

How Asset Allocation Can Change With Age

These portfolios are for illustration only and may require substantial modification based upon the individual circumstances of the investor.

Since this decision is so important, many investors rely on the guidance of an investment professional for help allocating their assets. And many financial services providers, in fact, offer asset allocation programs. Asset allocation programs are designed to help make the allocation process as convenient as possible, and offer investors the benefit of professional investment expertise in making their decisions and maintaining their allocations.