Asset allocation is simpler than it sounds; it’s basically just how you divide your investments up. Imagine you’ve got a pie divided into 8 pieces but they’re not all from the same pie: two pieces are Grandma Rasmussen’s world famous Dutch Apple, three pieces are Pumpkin Pie, two Pecan slices, and one Blueberry slice. It’s similar with how you’re IRA (or other investment account) is divided up!