Asset Allocation Basics
Learn how to diversify your portfolio and use WalletMap to monitor your allocation.
Table of Contents
1. What Is Asset Allocation?
Asset allocation is the strategy of spreading your investments across different asset categories — such as cash, stocks, and crypto — to balance risk and reward. A well-diversified portfolio reduces the impact of poor performance in any single asset class.
2. Common Allocation Strategies
Conservative portfolios might hold 60% cash, 30% stocks, 10% crypto. Balanced portfolios often split 40% cash, 40% stocks, 20% crypto. Aggressive portfolios might go 20% cash, 50% stocks, 30% crypto. Your ideal allocation depends on your age, risk tolerance, and financial goals.
3. Setting Your Target Allocation
Decide on your target percentages for each asset category. While WalletMap doesn't enforce targets, you can use the allocation pie chart on the Charts page to see your current distribution and mentally compare it to your goals. Review your allocation monthly or quarterly.
4. Monitoring Your Allocation
The Charts page shows your current asset allocation as a pie chart. As market prices change, your allocation will naturally drift. For example, a crypto rally might push your crypto percentage above your target. Regular monitoring helps you stay aware of these shifts.
5. Rebalancing Your Portfolio
When your actual allocation drifts significantly from your target, consider rebalancing — selling some of the over-weighted asset and buying more of the under-weighted one. Update your holdings in WalletMap after rebalancing to keep your records accurate.
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