WealthAsset allocation (definition)
Why it's the #1 choice
Decades of research show allocation explains most of the variability in a diversified portfolio's returns. Choosing 80% stocks / 20% bonds matters far more than choosing between two similar stock ETFs.
How to choose yours
- Time horizon: the longer it is, the more stocks you can hold;
- Risk tolerance: can you sleep if your portfolio drops 30%?
- Goal: growth (more stocks) vs income/preservation (more bonds).
A simple starting rule: "110 minus your age" as a percentage in stocks. Then you hold the target through rebalancing.
Frequently asked questions
What is a good asset allocation?
There's no single answer: it depends on your horizon and risk tolerance. A common starting point is "110 − your age" in stocks, the rest in bonds.
Allocation vs diversification — the difference?
Allocation = the split across classes (stocks/bonds). Diversification = not putting everything in one security or country within each class.
Does an all-in-one ETF set my allocation?
Yes. XEQT = 100% stocks, VGRO = 80/20, VBAL = 60/40 — you pick the risk level by picking the fund.
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