Everyone wants to have more money. Moreover, people want to achieve that state of financial freedom that describes a level of success that could be described as "financial independence." Some say that the wealthiest 5% of individuals have more than the 95% put together between them in terms of financial net worth. Why do people desire money success? There are too many reasons to list here. Perhaps you could make a list yourself. Writing 100 reasons why to decide to be wealthy is a valuable exercise taught in many financial success seminars.

Allocation of assets can be considered a key to financial success. But what exactly is asset allovation? And what is its cause and effect relationship in the building of wealth and the creation of financial success? There are are large number of assets that can be invested in. Firstly lets make the distinction between asset and liability.

Simply put, an asset is something that probably cost you money and either makes money or increases in value. A liability is something that costs money and decreases in value. A car is a good example of a liability. Although a motor vehicle is an "asset" in that it has its benefits, in terms of financial key to asset allocation, a car decreases in value and keeps costing you money at the same time (usually, unless it is a classic car for example - but then you wouldn't want to drive it too much to keep the mileage low). Similarly "toy" such as electronic goods are usually liabilities.

A house can be an asset, because after you buy it, after you have made renovations or improvements along with the historical evidence of supply and demand action in the market, the value can go up.The same is true of a successful business. You channel money in to a business first and after establishing the business it can pay for many years to come.

Allocation of liquid assets is what we are considering here. With many investment opportunities available to the person with virtually any amount of capital, it is a challenge to find the right opportunity and to correctly allocate financial assets in order for their continued growth and your increasing wealth.

A portfolio of stocks is one possibility. For the person with a higher risk appetite and some skill and training in creating a portfolio, managing losses and finding the best stocks, this way has made many an American very wealthy. Nowadays there are also managed mutual funds (investment funds) whose managers are professionals at asset allocation in the stock market. This is lower risk than individual stock investing, but still carries a risk. Some funds have very good returns, but it is worth always looking at the performance in the long term (ie 5-10 years) and many other factors, such as manager's historical performance, sector and country etc. "Always consult your financial advisor before taking a decision" is the forewarning when mentioning anything like this, and applies here to. Trading the foreign exchange market is a possibility also (forex) again with high risk associated and industry warnings attached.

The advantage of funds over a stock portfolio is that you get automatic diversification within the portfolio but without having to do the research on each of the companies yourself. Instead you are delegating a professional money manager to do that for you. Online information is quite good and often free if you look in the right places for fund performance histories, portfolios and management.

A lower risk alternative to stock markets are the market in government bonds. Over the long term, bonds do not compare so highly to equities markets as regards to returns. A bond will pay a fixed return over a time (long term).

Diversification is key. Starting a business, investing in equities capital markets, real estate and long term safer investments will create balance in your portfolio and help you to achieve financial independence with less stress and worry. The chances are that if you spread your investment, there will be more likelihood in the event of one investment heading south, that another will either hedge or outperform the unsuccessful in overall profitability.

Research, professional advice from someone who is practicing what they are preaching as well as keeping a close management eye on your portfolio will hekp identify strengths and weaknesses in the portfolio and allow the investor to change, sell, or increase investment where and when appropriate to do so.