The most important strategy for investing money

Have you ever heard people say "I buy stocks and keep them forever" or "I day trade stocks" or "I only invest in real estate". There are many more expressions about investment strategies. However, none of these expressions or strategies are as important as what should be the number one priority in investing money. Asset allocation is the most important criteria to be successful investing money. Asset allocation is the investment strategy that aims to balance the risk and reward of the investor. The strategy will vary based on the age and risk tolerance of the investor. There are many choices of assets to invest in. There are equities (stocks), fixed income (bonds), cash (money markets, CDs), alternative investments (hedge funds, private equity, venture capital, structured products) and real estate. Within each of these asset classes there are choices to be made. For instance, once you have determined what percentage of your assets are to be allocated to equities (stocks), you then must break down what types of stocks to invest in (large cap, small cap, growth, value, income, foreign, emerging markets etc). There is a process in correctly investing your assets once your age and risk tolerance have been factored in. Once the allocation of assets has been determined, the only thing left to do on a regular basis is rebalancing. On a quarterly basis the assets are rebalanced so that they always have the same percentage invested in each asset class. For example, if your asset allocation had a 20% allocated to stocks and that grew to 25%, you sell 5% and reinvest proportionately in the other asset classes. Success in investing over time is achieved by those who use proper asset allocation.