The Importance of Asset Allocation

20% of American households have their wealth almost entirely tied up in illiquid assets like real estate and retirement accounts with almost no liquid cash on hand. A 2001 academic paper interprets this pattern as being the result of households deliberately storing wealth to protect it from lack of self control. The popular authors don't tend to advise this as a saving strategy, most advise keeping a liquid emergency fund on hand. More than half of the books recommend an investor's asset allocation should become more conservative with age.