ASSET ALLOCATION

Asset Allocation is the diversification of your money into different asset classes (group of investment options with similar chararcteristics) analysing the risk profile and the goals of an individual.

What is Asset Class?

Asset class is group of investment options with similar characteristics.

Fixed Income(Bonds,PPF, Government Securities)




Equities(Shares,Large Cap,Mid-Cap)




Cash(Savings/Current Account, Hard Currency)




Real Estate(Land,Apartments,Shops)




Commodities(Gold,Silver)




Collectibles(Art,Antiques) 

Why Asset Allocation is required?

Asset Allocation is required to diversify the investing across various asset classes to reach financial and personal goals faster keeping the risk appetite of an individual.

How to Allocate of Assets into various asset class?

There are no one fit rule for this but a general thumb rule is take more risk when you are young because that is a time when you don't have much responsibilities on you.

You can actually follow this standard to allocate your asset.

Let's suppose your age is X.

So, ideally you should be investing (100 - X)% of amount into stocks from you actual savings per month.

Suppose if you are 25 and you save Rs 10000 every month.

So, accordinly you should invest (100-25)% equals to 75% i.e Rs 7500 of your saving into Equities.

The left over 25%, invest 12.5% into cash equivalents and the other 12.5% into fixed income.

Ofcourse this is not an investment advise for anyone reading this post this is what I personally do.Since, I am ready to take risk to earn huge profit so I am risking my 75% of savings.

You might not be the same, so as per your risk apetite you can increase or decrease the percentage of investment into Equities, but I highly recommend to take some exposure (atleast 10%) in equities keeping a long term perspective.

Ofcourse this isn't the end of Asset Allocation it's a very vast topic but I think I have covered all the essential basics.

To help you all I have attached my excel sheet link below so that you can Allocate your assets accordingly.You just need to change two inputs one is Age other one is Savings after expenses 

Click here to download the excel sheet.

Till then keep investing, and I will come with a new post very soon.