What's the right stock percentage?

It depends on age, goals, and risk tolerance; "110 minus your age" is a rough starting point.

Does diversification prevent losses?

No, it reduces them but doesn't eliminate them.

Asset allocation

📈 Economics By CampusDown Wiki Editorial Team Last updated October 26, 2026 Views 1

Asset allocation is how you divide your money among asset classes—stocks, bonds, cash, real estate—based on your goals, time horizon, and risk tolerance.

Contents

1. Why it matters most
2. Common strategies
3. FAQ
4. References

Why it matters most

A famous 1986 study by Brinson and colleagues found that over 90% of the variation in pension fund returns came from asset allocation, not stock picking. Mixing assets that don't move in lockstep lowers risk for a given return, the core idea of modern portfolio theory.

Common strategies

The 60/40 portfolio is the classic. Ray Dalio's All Weather spreads risk across growth and inflation scenarios. Target-date funds shift from stocks to bonds as retirement nears. When markets knock your mix off target, rebalancing brings it back.

FAQ

What's the right stock percentage?: It depends on age, goals, and risk tolerance; "110 minus your age" is a rough starting point.
Does diversification prevent losses?: No, it reduces them but doesn't eliminate them.

Sources reviewed: 2026-10-26

References

Brinson, G. P., Hood, L. R., & Beebower, G. L. (1986). Determinants of portfolio performance. Financial Analysts Journal, 42(4), 39–44.
Markowitz, H. (1952). Portfolio selection. Journal of Finance, 7(1), 77–91.

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There are no materials dedicated to this theory yet, but you can search related reports in the CampusDown library (Korean).

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This article was last updated on October 26, 2026. It is based on widely recognized original works and textbooks; when citing it in a paper, please check the original sources listed in the references.