As I mentioned in my previous post, for the average DIY investor, a passive investing strategy is the most optimal – it produces the most reliable result with the least effort from the investor.

Is implementing passive investing completely effortless?

Well, you will need to do a bit of homework before starting. That homework is determining your asset allocation.

Typically, the four main asset classes are:

In this article, I will only talk about stocks and bonds which are the two main asset class for your portfolio. In my next article we will explore the other asset classes, sub-classes and rebalancing your portfolio.

I will first talk about what is asset allocation and I would discuss factors that affect your allocation mainly your risk appetite, your ability to take risks and your needs.