Asset allocation is the split of your wealth across asset classes: equities, bonds, property, crypto, cash. Not which positions you hold, but which kinds of asset you are in.
It sits a level above diversification within your equities. Spreading across fifteen sectors is still spreading within one class.
Why it counts separately
Asset classes respond differently to the same event. Rising rates hit bonds and house prices differently from equities. That behavioural difference is why the split across classes tends to matter more than the choice of individual names within one.
For most European households this is a confronting picture, for one reason: the home. Someone with a €400,000 house and a €40,000 securities portfolio holds wealth that is over ninety per cent property. All the attention goes to the €40,000 while the split is decided elsewhere.
Gross or net
One choice strongly affects the outcome: do you count the value of your assets, or that value minus the debt attached to it?
CountsShowsGrossAsset valueWhat you are exposed toNetAssets minus debtsWhat is actually yours
A €400,000 house with a €300,000 mortgage counts as €400,000 gross and €100,000 net. Two completely different pictures of the same household, and both are useful. Make sure you know which one you are looking at.
What goes wrong
- Looking only at the brokerage account. The most common mistake, and the most understandable, since it is the only part with a dashboard. Pension, home equity, cash and a business stake rarely appear on one screen.
- Forgetting cash. A large savings buffer is an allocation choice, even when it does not feel like one.
- Confusing labels with behaviour. A listed property fund moves more like an equity than like property.
In practice
Gylder builds the split from everything you have added, including manual entries such as a home, physical gold or silver and a business stake. An allocation that only knows your brokerage account does not describe your wealth.
Within investments, set the diversification donut on the Overview tab to security type to see the class split there. The Analysis section shows concentration across your whole net worth, which is usually the more relevant view for this question.
Gylder does not prescribe a target split. What suits you depends on your horizon, income, debts and plans, and proposing one without knowing those would be advice dressed up as a calculation.
Related terms
- Diversification: spread within and between classes
- Portfolio: weight and concentration per position
- Loan to value: why property counts differently net
Want to know how heavily property really weighs in your picture? Read Calculating your home equity.