We all know of the age-old proverb “Don’t put all your eggs in one basket” This is a universal principle and it applies particularly to money. In the language of financial planning, the one word to describe this proverb is “Asset Allocation”

1. What is asset allocation?


  • Asset allocation is the scientific process of investing and managing your money in different categories of assets.

  • For the common investor (who is not an ultra high net worth individual) Broadly there are 3 major categories available, i.e.: Stocks, Bonds and Cash equivalents.

  • Asset allocation is the process of defining the ratio of investments to be made in each asset class. E.g.: is it 60% equity, 30% bonds 10% cash OR 80% equity, 20 % bonds, 0% cash OR 40% equity, 40% bonds 20% cash OR………?

2. What is the purpose and benefits of asset allocation to investors like me?


  • The purpose of a good asset allocation plan is to develop an investment portfolio that will help you reach your financial goals with the degree of risk that you are comfortable to take. A well-diversified plan over time is the most effective way to realize your long-term goals.

  • 3 major benefits of asset allocation plan.

1.Reduces risk: it reduces your portfolio risk by spreading your money across the 3 different asset classes.

  • 2.Gives consistent returns: it increases your probability to earn more consistent returns over time. By investing in several asset classes, you improve your chances of participating in market gains, and reduce the impact of poor performing asset categories on your overall portfolio returns.

  • 3. Helps you stay focused on your goals. A well-allocated portfolio reduces the need to constantly adjust investment positions to chase market trends, and can help reduce the urge to buy or sell in response to the market’s short-term ups and downs.

3. Who will do this work as I am busy in my day job and have no spare time?


  • Your financial planner will do the asset allocation construction for you. He/She may charge you professional fees for doing the same and you should happy to pay an expert to do this work for you, while you are busy in your day job or business activity.

  • We at www.investmentz.com provide financial planning services to our customers. Please call us right NOW to make your asset allocation and financial plan.

All the best for achieving goals!!

Prashant M.Mehta


Disclaimer: Investment in securities market are subject to market risks, read all the related documents carefully before investing.

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