So you correctly understood that asset allocation in portfolio plays vital role in terms of returns and overall financial health. This asset allocation also depends upon age, income group, risk appetite and need.
Person who is young in age group of 20-30 can take more risk and hence he should invest in stock market high risk ,high return asset, while person who in age group of 50 + has to reduce his investment in risky asset and invest more in to debt instrument & fix return investment class. Consider following table which is depicted for example purpose.
|Asset class||Single||With Family||Near to Retirement|
|Equities||50 %||30 %||20%|
|Fix Return||10 %||30 %||30 %|
|Gold||15 %||20 %||25 %|
|Property||15 %||10 %||10 %|
|Cash/Money Market||10 %||10 %||15 %|
Asset allocation play vital role in terms of returns and overall financial health. One should make investment in asset class after taking advice from financial adviser. Time to time one should re-look in to asset class one has invested in.