Glide path

A planned shift in asset allocation over time, usually towards more stable assets as the date the money is needed approaches.

Example

A portfolio for a goal fifteen years away moves gradually from a growth-weighted mix towards a more stable one as the date nears, on a schedule set in advance.

Important

Writing the path down converts a long series of anxious decisions into one decision taken calmly, which is most of its value - the schedule matters less than having one.

Related terms

• Asset allocation — The split of capital across broad asset types - equities, bonds, property, cash - expressed as target percentages. The decision that sits above choosing individual holdings.
• Time horizon — How long before you plan to spend the money you are investing.
• Rebalancing — Buying or selling to bring a portfolio back to its intended mix after markets move it out of shape.

Lessons that explain it

• Asset allocation: the decision above the holdings — How much you hold in each broad type of asset shapes your experience far more than which particular items you choose inside them - and it is the decision most people spend the least time on. (14 min)
• The long-term core of most plans, after the money you might need sooner — For most people, tax-advantaged retirement accounts hold the long-term part of their savings, but only after money for emergencies and nearer goals is set aside elsewhere. (9 min)

All 578 terms in the Investing glossary