Allocation Rate
What is Allocation Rate meaning?
Allocation rate refers to the proportion of funds allocated to specific investments, such as stocks, bonds, or real estate, within a portfolio. It’s used to manage risk and target returns.
Example
A retirement fund with a 60% allocation rate to stocks and 40% to bonds aims to balance growth with stability, depending on the investor’s risk tolerance.
How is Allocation Rate used in business?
In business and investment management, the allocation rate helps determine how assets in a portfolio are distributed to meet financial goals, risk preferences, and market conditions.
Pro Tip
Consider adjusting your allocation rate as your financial goals evolve, especially when approaching key life events, such as retirement or buying a home.
Related Terms
Asset Allocation, Portfolio Management, Risk Tolerance