Spreading Your Assets Around
NO SCATTER SHOTS
Asset allocation doesn't mean making random investments or simply accumulating a lot of investments for the sake of owning them. In fact, it's just the opposite. Allocation is about finding the right mix of asset classes to match your goals, given your age, the amount you have to invest, and your risk tolerance. Then you'll be ready to diversify your portfolio within each asset class.
The same range is appropriate in each of the other asset classes. Bonds are issued by different types of companies, pay different rates of interest, and have different credit quality. Some mix of those alternatives is likely to serve you better than a portfolio made up entirely of Treasury bills or mortgage-backed bonds.