No, it will be your asset allocation. That is, the way you slice up your portfolio into broad categories of, say, large-cap growth stocks and value stocks and triple A bonds and so on. There are many opportunities available to today s investor. Taking advantage of these opportunities by strategically distributing your money in a number of different instruments can protect your portfolio and improve your chances of achieving a desired return. It is important for investors to understand that diversification in building a balanced portfolio helps reduce risk and improve returns.
Asset allocation is yet another way to diversify.
Bonds aren't so lucrative, but they offer a lot more stability than stocks. Money-market returns are puny, but you'll never lose your initial investment. An asset-allocation strategy looks at your particular goals and circumstances and determines what asset mix gives you the optimal blend of risk and reward. Asset allocation is a process that you re-visit again and again as you continue to build your portfolio throughout your life. Chances are that, over time, the value of your investments in stocks will grow more quickly than that of your investments in bonds and cash equivalents.