Asset allocation is the mix of stocks, bonds, gold, and other assets in your portfolio. It is one of the most important drivers of long-term returns and risk.

Common Allocations for FIRE

• 100% equity — Aggressive; for young investors with long horizons
• 80/20 or 75/25 — Equity/debt; moderate risk
• 60/40 — Classic balanced; lower volatility
• Age in bonds — e.g., 35 years old = 35% debt, 65% equity

India Asset Classes

• Equity — Mutual funds, ETFs, direct stocks
• Debt — PPF, EPF, FDs, debt funds, NPS
• Gold — Gold ETF, SGB (Sovereign Gold Bonds)
• Real estate — Direct or REITs

Rebalancing

Over time, winners grow and allocation drifts. Rebalancing—selling winners and buying losers—keeps your target mix and can improve returns.