Strategies of Asset Allocation
Allocation of an asset is an investment strategy. Its aim is to balance risk and reward by dividing each asset among various categories like mutual funds, bonds, stocks, real estates, cash equivalents, private equity, etc. Each category has different levels of risk and return. The main principle is a risk and return theory is the higher the risk the higher the return.
According to the financial experts’ allocation of an asset is the most important activity as to determine the level of returns comes from the investment. All kinds of investments have different levels of risk and return as to diversify the overall risks for the sake of variability returns from the investment. You should make a strong investment portfolio as it would impact on your financial goals. Here are some strategies were given which help you to make a proper allocation of assets as prescribed below:
- There are no hard and fast rules for allocation of assets. However, it depends on the investor’s investment goals, age, market expectations, time frame and risk factors. You should be aware of the market movements on a daily basis and all other factors impact on the investment activities.
- One should preserve cash enough as he/she requires in the contingencies in his/her routine life as to protect yourself and your family. This is generally for twelve months that how much cash you need during this period. Remember don’t preserve more cash as you could miss the opportunity of investment and return on it.
- One can invest in the form of stamps, gold, precious metals, silvers, etc. which is called as hard assets. It requires generally 30 days for selling.
- There is one more option as to invest in real estate property but it may take more time if you want to convert into cash form. It also requires big liabilities like property insurance, maintenance, taxes and mortgage payments.
- There is one of the best ways to invest is in stocks or bond or mutual funds. There are categories depend on the duration such as long term and short term investments.
Most Searching Terms:
- Best Long Term Asset Allocation/ Model Portfolios
- A New Asset Allocation Strategy for Retirement
- Asset Allocation Strategies by Age Calculator
- What is An Asset Allocation in Mutual Fund?