When deciding an asset allocation, typically, households should hold:

Question

Quizplus · Accepted Answer

Young households have a longer period to save and invest, so they can afford to take more risks by holding a higher proportion of stocks. Over time, stocks have historically provided higher returns than bonds or cash. As households near retirement, they should gradually shift to a more conservative asset allocation by increasing their holdings of bonds and cash, and decreasing their holdings of stocks to reduce the risk of market volatility affecting their retirement savings.

When Deciding an Asset Allocation, Typically, Households Should Hold