As the world watches the Twitter vs #ElonMusk saga unfold, and questions, “What is happening?”, let’s take look at a question that’s been on many investors’ minds for a while - “What does #assetallocation actually mean, and why should I care?” (1/6)
The short answer (within 280 characters), is that asset allocation divides your investments across different asset classes like #equity, debt, #gold etc., in order to achieve a specific investment goal, at a certain growth rate. (2/6)
Why is this necessary? For starters, it ensures that you stay invested for the duration needed, while also helping you decide how much you should invest in sub-asset classes like #large-cap or #mid-cap equity, low duration funds or liquid funds. (3/6)
To reach any investment goal, you need to take risks depending on the time you have, the amount you need, and the rate of return necessary. Asset allocation ensures your investments are only as volatile as you are ok with, depending on how much #risk you can take. (4/6)
While asset allocation may lead to lower growth rates, it is essential to #financialplanning. It also ensures you have the stability that is crucial in order for you to actually achieve your goals. (5/6)
To dig into the numbers and details behind the idea, read this @livemint article with @anupbansal02 in-depth view: livemint.com/money/personal… (6/6)
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