Asset allocation: Guideline for investment 

In the investment world, asset allocation is an important concept that needs to be included. What does Asset allocation mean? In simple terms, asset allocation is all assets the customer has invested into and to what amount. This would help you to understand how much the current investment is holding. 

People, while investing, never look at this concept. An average investor needs help to understand the instruments that are complicated or make an understanding of the market. So when he approaches an advisor or reads online material, he knows he needs to start investing. But needs to make more effort to understand the effectiveness of his investment. Few succeed, few scum, or few run away when the market conditions are unfavorable—making investors experience a horrible case.

What are different assets? 

Generally, asset classes fall into three broad categories: equities, Fixed- Income and Cash and Equivalent. Anything outside these three categories (real estate, commodities, etc.) is alternative assets. 

What conditions affect the asset allocation?

Risk Tolerance:

Assessing the risk of the customer is very important. Without the assessment, even one educated customer also looks at past returns and chooses the wrong product. Even the advisor needs to do a fare service to the customer if the risk profile is unknown. 

Goal Setting:

 Another aspect is goal setting. A customer has to know when and for what purpose he is investing. This again helps in setting the asset for the customer. 

Time Horizon:

Though time horizon and goals are linked, they can still it should be discussed as a separate thing. When we achieve the plan, and a few years before that, the asset allocation might change. 

What benefits does a person derive from asset allocation?

Different asset classes perform differently in additional years. So, the asset allocation helps to keep your portfolio returns under check. Your risk is diversified across asset classes, and your portfolio may seem overall balanced. 

Buying / Selling decision:

Many investors always need clarification on when to enter or exit an asset class. If the customer looks at his ideal asset allocation, he will have a fair idea of which asset class he should hold or which asset class he should sell. 

Road map:

Asset allocation is a general road map on which your investment is built. It keeps you on track. It guides you on every investment decision you make. 

Portfolio review and rebalancing:

Asset allocation guides you to make it easier to review your portfolio and balance the budget in each asset accordingly. 

Asset allocation also changes with a person’s age, as his requirement, risk tolerance, and goal achievement change. The best possible thing is to sit with your advisor to make the best allocation plan for you and invest according to that. We believe in supporting asset allocation and helping our clients to stay on the path. This has resulted in excellent results with less risk for the investor. A personal touch and asset allocation is something we believe as no two individuals are the same. And one solution may not serve all.