Asset allocation is a term to define the way investors divide their money to buy various asset classes such as stocks, bonds, gold and mutual funds. It is one of the most important decisions investors take when they build their investment portfolios.
Asset allocation can help maximize returns and minimize risk for an investor. This is why investors take asset allocation seriously. Given the importance of asset allocation, we provide you a framework on how you can allocate your hard-earned money into various assets.
The Traditional Way
Usually when investors decide on how to allocate assets, they fall to a few traditional patterns.
However, this framework considers only risk and not many other aspects such as time frame, financial goal, age, and income levels that come with investing.
To manage asset allocation better, all these aspects must also be taken into consideration as an investor.
Let’s look at a new method of asset allocation
This new method will take into account the time frame of investment and financial goals as well, in addition to risk profile.
With this new method of asset allocation, you will not only look at your risk profile, you will also take into account many other factors that affect your investment. Make sure you get a good financial advisor if you want to get the best asset allocation for your financial goals.
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