Business, Legal & Accounting Glossary

Definition: Allocation


Quick Summary of Allocation

The apportionment or designation of an item for a specific purpose or to a particular place. The systematic distribution of a limited quantity of resources over various time periods, products, operations, or investments.

What is the dictionary definition of Allocation?

Dictionary Definition

The process or procedure for allocating things, especially money or other resources.

Full Definition of Allocation

In general, allocation means to distribute according to some plan. In investing, allocation is heard most often in “asset allocation.” Large pension funds and individual investors alike aim for an allocation of funds that best achieves their investment objectives, like safety, steady income, and capital appreciation. Asset allocation for the individual investor usually focuses on relative percentages of bonds and stocks (eg, 60% stocks and 40% bonds). Bonds provide safety and steady interest payments. Stocks vary widely in their risk and, based on their dividend policy, the size and regularity of cash payments. In making both inter-group and intra-group allocation decisions, investors seek balance, so that strong performers will offset other assets that will likely perform poorly under the same conditions. Optimum asset allocation necessarily varies over time, both because investors have different needs at different stages of their lives and because the investing environment continually changes. For example, young investors will usually have a heavy allocation of stocks because capital appreciation will build their retirement nest-egg, while retirees will want a greater allocation of bonds for steady income.

In the law of trusts, the allocation of cash dividends earned by a stock that makes up the principal of a trust for a beneficiary usually means that the dividends will be treated as income to be paid to the beneficiary. The allocation of stock dividends generally means that such dividends will be added to the shares of stock held as principal, thereby increasing its size.

Examples of Allocation in a sentence

If you want to give out rewards to your workers you should do your best to have the allocation be fair.

I pay close attention to the allocation of funds across a diverse set of stocks while building and maintaining my portfolio.

The business decided to use an allocation of 20% of the budget towards research and development. They knew they needed to continue to be innovative to be players in the industry.

Related Phrases

Coase Theorem
social welfare function
target retirement fund
contract curve
940 Form Schedule R
allocation notice
allocation of resources
asset allocation
allocative efficiency
balanced investment strategy
allocation efficiency
asset allocation fund
dynamic asset allocation
allocation of income rules
allocation of purchase price
capital allocation decision
allocation rate
allocation of plan assets on termination
allocation of resources
tactical asset allocation

Cite Term

To help you cite our definitions in your bibliography, here is the proper citation layout for the three major formatting styles, with all of the relevant information filled in.

Page URL
Modern Language Association (MLA):
Allocation. Payroll & Accounting Heaven Ltd.
August 16, 2022
Chicago Manual of Style (CMS):
Allocation. Payroll & Accounting Heaven Ltd. (accessed: August 16, 2022).
American Psychological Association (APA):
Allocation. Retrieved August 16, 2022
, from website:

Definition Sources

Definitions for Allocation are sourced/syndicated and enhanced from:

  • A Dictionary of Economics (Oxford Quick Reference)
  • Oxford Dictionary Of Accounting
  • Oxford Dictionary Of Business & Management

This glossary post was last updated: 30th October, 2021 | 0 Views.