Strategic asset allocation is an investment strategy that involves dividing an investment portfolio among different asset categories, such as stocks, bonds, and cash. The goal is to balance risk and reward according to an investor's specific financial goals, risk tolerance, and investment horizon. This approach is typically set for the long term and is based on historical data and market conditions. Once the initial allocation is established, it may require periodic rebalancing to maintain the desired risk level. This means adjusting the proportions of each asset class as market values change, ensuring that the portfolio remains aligned with the investor's objectives over time.