Do you want to know the secret to make a fortune in investments? The secret that offers you a huge profit with little or no risk? I am sorry to disappoint you, but there is no such thing.

What I can give you is the next best thing; that there are investments with great returns and low amounts of risk and costs. This is called asset allocation. Asset allocation is deciding how to divide your investing money among various types of asset.

You want to achieve some important financial goal such as owning a home, helping your kids through college, retiring comfortably. All this is possible if you invest smart. If you want to be successful, you need to avoid high-risk investments.

If you want to succeed in investing, asset allocation is very important. One of the fundamental aspects of asset allocation is the power of diversification. You do not want to put all your money in one single investment.

Maybe you heard of the Enron story. Enron began as a modest oil company and turned into one of the largest companies in the United States. Thousands of people had a great part of their life savings invested in stocks of this company. The investment was generally considered safe and sound with very little risk. Then something happened what no one expected; Enron went bankrupt. The cause was accounting fraud. What is the important lesson from this story for investors: keep your investments diversified.

Diversification over multiple assets is more important than ever due to the uncertainty of the markets. You have to spread you investments over bonds, stocks, commodities and real estate to limit your portfolio risk. Furthermore, it is not enough to have these assets in your portfolio; you have to keep a very close eye on them.

Asset allocation is the investing approach that is relatively unexciting, but in the long term gives you better results. If you want to go for some action however there are alternatives.