Mutual Funds
About Mutual Funds
Asset Allocation

Asset allocation means distributing your investment in different asset classes like equity, gold, debt, and cash. There is no single asset which offers positive real returns under all conditions.

Your Asset allocation depends on the following:

Time Horizon ĖIt means when you require money for your particular goal. It may be short, mid and long term horizon. Without time horizon, Financial Planning is really impossible.

Risk Appetite - It means how much financial loss you can manage for time being, say few months or years, to achieve your particular goal. It is only applicable for non-guaranteed investment. It is very rare that long term horizon investors lose their money in non-guaranteed investment. Based on risk appetite, the investors can be classified into three categories - conservative, moderate and aggressive.

Different Life Stages Ė Each and every life stages have different goals and liabilities. A young person with less/no dependents and liabilities have different goals, rather than a person with dependents and liabilities.

Past Experience Ė Every individual have their own past investment experience in different asset class and this experience plays a vital role for future investment plan.

Net Worth Ė A positive net worth personís asset allocation will be different from a negative or equal net worth person.

Why Asset Allocation is so important?

Asset allocation is like Balanced Diet. Without Balanced Diet we canít live healthy. Without Asset allocation itís really tough to achieve financial goal.

What asset allocation is best for me?

There is no specific answer for this. Each and every individual have different Asset Allocation based on their time horizon, risk appetite, different life stage, past experience and net worth. Please remember no Asset Allocation strategy is fixed for life, itís a changing process based on your current situation.

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