Plan Your Asset Allocation For Wealth Creation

Wondering where to invest your money? Here is an expert piece of advice on how to plan your asset allocation for maximum potential return.

- Ashish Shanker

Asset allocation is the foundation for building any investment portfolio. Different asset classes (e.g. Equity, Fixed Income, Gold, etc.) perform at different points in time. However, over a long period of time, an asset allocated portfolio is likely to outperform any single asset class. Over and above, such portfolio would have the least volatility across a long time period compared with any other asset class.

Our experience has been that while investors enjoy the bull runs and rallies in equity markets, any inevitable bumps along the way causes pessimism and pain. Most of this happens as investors never invest according to their risk appetite and their financial goals for the investment. They mostly follow the herd mentality and end up taking impulsive calls. A good example of this situation is investors deploying money in euphoric phases when the markets rally extensively due to sentiment, irrespective of their risk appetite. Similarly they tend to fall prey to a negative bias and have a temptation to redeem during market troughs.