Understand the concept of asset allocation from "summary" of Investing for Dummies by Eric Kevin Tyson
Asset allocation is a crucial concept in investing that involves spreading your money across different asset classes. The main asset classes are stocks, bonds, and cash equivalents. Each of these asset classes has its own level of risk and return potential. By diversifying your investments across these asset classes, you can potentially reduce risk and improve your chances of achieving your financial goals. Stocks have historically provided the highest returns over the long term but also come with the highest level of risk. Bonds, on the other hand, tend to be less risky but offer lower returns. Cash equivalents, such as money market funds, are the least risky but also offer the lowest returns. The key is to find the right mix of these asset classes based on your investment goals, time horizon, and risk toleran...
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