Glossary
Asset Allocation
Asset allocation is how you divide your investment portfolio among different asset classes — stocks, bonds, real estate, and cash. It's the primary driver of both risk and long-term returns.
Why it matters
Studies consistently show that asset allocation explains over 90% of portfolio return variability — more than individual stock picks or market timing. Getting the right mix for your age, goals, and risk tolerance is the most impactful investment decision you can make.
Example
A 30-year-old might target 80% stocks and 20% bonds, while someone nearing retirement at 60 might shift to 40% stocks and 60% bonds.
How Ray helps
Ray can analyze your connected investment accounts and show your current allocation across asset types. Try to see if your portfolio matches your intended risk level.
$ ray "what does my investment allocation look like?"Related terms
Diversification
Diversification means spreading investments across different asset classes, sectors, and geographies to reduce the impact of any single investment's poor performance on your overall portfolio..
Portfolio
A portfolio is the complete collection of your financial investments — stocks, bonds, mutual funds, ETFs, real estate, and other assets.
Index Fund
An index fund is a type of mutual fund or ETF designed to track the performance of a specific market index, like the S&P 500.
Mutual Fund
A mutual fund pools money from many investors to purchase a diversified portfolio of stocks, bonds, or other securities.
Roth IRA
A Roth IRA is a retirement account funded with after-tax dollars, meaning withdrawals in retirement — including all investment growth — are completely tax-free.