What is an Asset Allocation

Everyone who has ever thought of investing money in something might have thought about what to invest in. This is not an easy topic, as there are lots of possibilities. Having a target asset allocation is key. In this article, I will go into what asset allocation is and how you can come up with one yourself.

In accounting, assets are things you own that have value. They are belongings you can liquidate, to turn them into cash. In other words, assets have a monetary value.

Assets are the opposite of liabilities, things that cost money to operate, or debt for example. 

When you want to reach financial independence, you have to build up enough assets to have a solid financial situation. Having a large stack of assets means you maybe don’t have to work for money, because your (financial) assets are creating income for you.

There are many different types of assets you can invest in. Classic examples are stocks, bonds, and real estate. However, also things like crowdlending, cryptocurrencies, private loans, and private equity can considered asset types for financial independence.

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