Asset Classes & Allocation

Stocks, bonds, cash and real assets, and how to mix them.

1. The Major Asset Classes — Stocks, bonds, cash and real assets each do a different job in a portfolio. Here is what each one is, what it tends to return and what can go wrong.
2. How Assets Behave in Booms and Busts — Different assets shine in different economic weather. Here is how stocks, bonds, cash and gold have tended to behave in expansions, recessions, inflation scares and sell-offs, with real examples.
3. Choosing Your Stock and Bond Mix — Your split between stocks and bonds is the biggest single decision in a portfolio. Here is how time horizon, goals and your tolerance for losses shape it, with common starting mixes.
4. Correlation: Why Mixing Helps — Mixing assets that do not move in lockstep smooths a portfolio’s ride. Here is what correlation means, with real numbers showing which funds really diversify a stock portfolio.
5. Cash, Liquidity & Emergency Money — Before investing for growth, you need money you can reach quickly without selling at a bad time. Here is how big an emergency fund should be, where to keep it and how cash fits in a portfolio.
6. Inflation and Real Returns — What matters is not how many dollars you have, but what they can buy. Here is how inflation erodes money, how to calculate a real return and which assets have held up best against rising prices.