Asset allocation
Your mix of stocks, bonds and cash.
Asset allocation is how you divide your money among types of investments, such as 80% stocks and 20% bonds.
Why it matters most
Your mix decides most of your long-run returns and how bumpy the ride feels. More stocks usually mean higher growth and deeper drops; more bonds mean a calmer ride and slower growth.
Many people hold more stocks when young and shift gradually toward bonds as retirement gets closer.