Another fundamental decision that must be made concerns the distribution of your investment across different types of assets. Different asset types—small stocks, large stocks, bonds—have very different risk and return characteristics. In formulating your investment strategy, you must decide what percentage of your money will be placed in each of these broad categories. This decision is called asset allocation.An important asset allocation decision for many investors is how much to invest in common stocks and how much to invest in bonds. There are some basic rules of thumb for this decision, one of the simplest being to split the portfolio into 60 percent stocks and 40 percent bonds. This popular 60-40 mix is generally a reasonable allocation strategy, but you should read the article in the nearby Investment Updates box before you finally decide.