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What is a good asset allocation for a 25 year old?
First, I'd recommend that you separate "short-term" assets from "long-term" assets in your head.  Short-term assets are earmarked for spending on something specific in the near future or are part of your emergency fund.  These should be kept in cash or short bond funds.   Long-term assets are assets that you can take some risks with and aren't going to spend in the next few years.  Under normal circumstances, I'd recommend 80% stocks/20% bonds or even 70/30 for someone your age, assuming you're saving mainly for retirement and thus have a correspondingly long time horizon.  These portfolios historically are much less risky than 100% stock and only return slightly less.   Right now, though, I think that anyone who doesn't absolutely need safety keep 100% of their long-term assets in stocks.  I'm 26 and this is my asset allocation.  Bond yields are absolutely pathetic by historical standards.  Even ten year treasury yields are comparable to S&P 500 dividend yields and likely won't outperform inflation if held to maturity.  The stock market is modestly undervalued when measured by difference between current P/E ratio and the historical average and more severely undervalued when you account for the effects of reduced inflation, transaction costs and capital gains taxes on fair valuation.  Therefore, the potential reward for taking risk is much higher now than it usually is.