Allocation Strategies Where Should Your Portfolio Be Invested?What percentage of your portfolio should be invested in stocks? In bonds? In other alternatives? How much should an investor hold in cash or money market funds? Answering these questions is a process known as asset allocation.Allocation Based on Age can be a dangerously oversimplified. One rule of thumb going around recently says that your age should be the same as your percentage of bonds. For example, that would mean a 60-year-old person should be allocated 60% to bonds, and the rest to equities. That might work for a few of us, but there is a lot more to it.Risk Tolerance. The asset-allocation decision is also dependent upon a person’s attitude about risk. There are some 60-year-olds who prefer to concentrate their holdings in stocks because they have a large portfolio, few financial responsibilities, and don’t mind the volatility. On the other hand, there are some 40-year-olds who are not comfortable with the ups and downs of the stock market. Attitude toward risk is a very personal decision.Then there is the Economy. When the economy is weak, do you really want a large exposure to stock investments that could crash? During such times, it may be hard to be patient, but that’s a lot easier than trying to recover from a drop like we had in 2008.The Recommended Allocation Strategy is to sit down with your Certified Financial Planner™ and discuss all the factors including your age, risk tolerance, outlook for the economy, interest rates, federal money policy, and your need for stable income. Your retirement funding is too important to leave to guesswork.Time Segmented Allocation can be even more effective than simple asset-class allocation. This is an attractive strategy that segments an investor’s savings into allocations targeted for specific time periods in their life. Your CFP® can help you explore how this might benefit you.