TL;DR
Asset allocation should be balanced among stocks, bonds, and gold; it typically influences over 90% of an investor's portfolio return. The recommended allocation varies based on age and risk tolerance.
8 min readAcademic research shows over 90% of portfolio returns come from asset allocation — the distribution across asset classes — not individual stock selection. The ratio between stocks, bonds, gold, and cash determines the portfolio's risk-return profile.
Core Asset Classes
Equities: highest long-term returns, highest volatility. Bonds: steady income, low volatility. Gold: inflation hedge, low correlation with stocks. Cash: liquidity, zero real return after inflation. In Turkey, TL deposits and TEFAS money market funds serve as cash alternatives.
Age-Based Allocation
Classic rule: 100 minus your age = equity allocation. At 30: 70% stocks, at 60: 40% stocks. Simple but effective — younger investors can tolerate more volatility and benefit from long-term compounding.
Turkey-Specific Factors
In a high-inflation environment, cash and TL bonds lose real value. Turkish investors should therefore hold higher equity + gold weight than developed-market investors. Currency diversification (USD, EUR) is also important. View historical asset class performance in our comparison tool.
Compare asset class performance.
Comparison Tool →Related articles: Portfolio Management Guide, MPT, Diversification, Rebalancing.
Frequently Asked Questions
What is asset allocation?
Asset allocation is a strategy that determines how investors distribute their portfolios among stocks, bonds, and other asset classes. The goal is to minimize risks while maximizing potential returns.
Why are stocks attractive for investment?
Stocks offer high potential returns and provide additional income sources such as dividend payments. For example, ASELSAN shares showed a 25% increase in value in 2023.
What are the advantages of bonds?
Bonds provide stable income through regular interest payments and generally carry less risk compared to stocks. For instance, a bond with a 10% annual interest rate and a nominal value of 10,000 TL yields 1,000 TL annually.
Why is gold investment important?
Gold is an important investment vehicle due to its ability to retain value during inflationary periods. Historically, gold prices tend to rise when inflation increases.
How is asset allocation calculated?
Asset allocation is determined based on the investor's risk tolerance, age, and goals. For example, a young investor may prefer a higher percentage of stocks, while a retiree might want more bonds.
This content does not constitute investment advice. Past performance is not a guarantee of future results. Make your investment decisions based on your own risk profile.
