Asset allocation refers to an investment strategy in which individuals divide their investment portfolios between different diverse asset classes to minimize investment risks.
There is no simple formula that can find the right asset allocation for every individual.
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There is no simple formula that can find the right asset allocation for every individual.
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1/ An Portfolio Distribution is influenced by factors such as personal goals, level of risk tolerance and investment horizon.
As there are multiple options for investment, on the basis of risk, can be classified into 3 categories, "High Risk", "Medium Risk" & "Low Risk".
As there are multiple options for investment, on the basis of risk, can be classified into 3 categories, "High Risk", "Medium Risk" & "Low Risk".
2/ "With great risk, comes great reward." - Thomas Jefferson.
But remember "For a low return on investment, the risks are also relatively low."
But remember "For a low return on investment, the risks are also relatively low."
3/
Portfolios can be majorly classifies into 5 major categories, considering above factors, such as:
1. Very Conservative: Main objective is preservation of capital; good for cautious or first-time investor; in equities only investment in Blue-chip or Index Funds.
Portfolios can be majorly classifies into 5 major categories, considering above factors, such as:
1. Very Conservative: Main objective is preservation of capital; good for cautious or first-time investor; in equities only investment in Blue-chip or Index Funds.
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2. Conservative: expects a modest level of portfolio appreciation for inflation protection with minimal principal loss and volatility; in equities focuses on high dividend yield stocks.
2. Conservative: expects a modest level of portfolio appreciation for inflation protection with minimal principal loss and volatility; in equities focuses on high dividend yield stocks.
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3. Moderate - looking for a balance between portfolio stability and portfolio appreciation; generally a portfolio for long term horizon (say 5 years)
4. Aggressive - objective is pursuing portfolio appreciation over time, investor who can track portfolio daily
3. Moderate - looking for a balance between portfolio stability and portfolio appreciation; generally a portfolio for long term horizon (say 5 years)
4. Aggressive - objective is pursuing portfolio appreciation over time, investor who can track portfolio daily
6/
5. Very Aggressive - primarily focused on pursuing above-average portfolio appreciation over time, can tolerate higher degrees of fluctuation; re-balancing the portfolio occurs a very short period of time.
5. Very Aggressive - primarily focused on pursuing above-average portfolio appreciation over time, can tolerate higher degrees of fluctuation; re-balancing the portfolio occurs a very short period of time.
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Important to remember that a strategic asset allocation strategy sets targets and requires some rebalancing every now and then.
#assetallocation #investing
Important to remember that a strategic asset allocation strategy sets targets and requires some rebalancing every now and then.
#assetallocation #investing
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Adding some great recent tweet threads in respect to Asset Allocation:
this one by @VidyaG88
Adding some great recent tweet threads in respect to Asset Allocation:
this one by @VidyaG88
https://twitter.com/VidyaG88/status/1376375683627118597?s=20
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By @RJGyanchandani on Strategic Asset Allocation
By @RJGyanchandani on Strategic Asset Allocation
https://twitter.com/RJGyanchandani/status/1380141567168573440?s=20
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