The way an investor divides their portfolio across different categories of assets — such as stocks, bonds, cash, or real estate — usually expressed as target percentages, based on their goals, time horizon, and comfort with risk.
Before picking specific investments, most people first decide the broader recipe: what percentage goes into growth-oriented stocks versus steadier bonds versus cash sitting on the sidelines. Someone decades from retirement can typically afford a more stock-heavy mix, since they have time to ride out downturns; someone close to needing the money often shifts toward a steadier mix to protect what they've already built.
A common example is a "50/25/25" split — 50% in a growth-focused fund, 25% in one income-focused fund, 25% in another — versus a more conservative "60/40" stocks-and-bonds mix often used closer to retirement. Neither is universally "right"; the right split depends entirely on the individual's timeline and risk tolerance.