What Does the Term Asset Allocation Mean?

Video Summary: The better allocated an account, the more likely the account is to achieve the goal that the investor is looking for.

Video Transcript:

As the allocation discusses the allocation of an account between the various classes of investments you could have. The typical allocation discusses what your account has between stocks, bonds, and cash, and potentially alternative investments. So, the better allocated an account, the more likely the account is to achieve the goal that the investor is looking for.

So if you want to high risk account because you want high returns, then your allocation should be allocated towards more high risk investments. And then, of course, the opposite would be true if you want to low risk account, it needs to be allocated to lower risk investments, which are generally going to be fixed income investments, and things of that nature.