Asset
Allocation : How much Important..?
This word is very familiar in today’s investment world but often the
investor or general public confuse or not very clear about it. The main purpose
of asset allocation is to minimize the risk involved in achieving a target
return or maximize returns with managing risk in prudent way. Asset allocation
works on a very famous proverb “Don’t put all your eggs in one basket”. It also play very vital role in any comprehensive financial planning.
We have mainly these types of investment assets:
- Cash
- Equity
- Precious Metal
- Real Estate
- Bonds
Among many of the the asset classes, mutual fund provide the well diversification and
professional management. Asset allocation through mutual funds gives you the
opportunity to get maximum benefit through diversification and reduce overall
portfolio risk. Mutual funds provide better asset allocation in cash, equity
and bonds asset class.
Before making any strategy to achieve long term financial goals through
asset allocation there are some important points given:
- Asset allocation helps you to make fine balance between return and
potential risk. It provides also a disciplined investment plan.
- It also protects your portfolio against declining market through
rebalancing and diversification.
- The most important thing is that your personal asset allocation
strategy may not similar than others. The financial goal and risk appetite
different for person to person. It based on mainly your age, risk
tolerance level, liquidity needs and time horizon.
- Please remember that asset allocation does not guarantee the best
return but it offers the balanced return with managing the risk which is
good enough to take care of your all future financial needs.
- The main aim of asset allocation or financial planning is to achieve
your future financial goal and peace of mind. It is not much important
that gain a maximum return from the investment but to achieve a peace of
mind with achieve a financial goal through risk management.
For more detail and any
other query related investment, you can contact me through my email.
Warm regards,
Arvind Trivedi
Certified
Financial Planner
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