what is Asset Allocation ? By Financial Consultant
The asset allocation decision is based upon your risk appetite. Risk appetite indicates how much risk you can tolerate / allow on your investments so as to achieve optimum returns. Some of the indicators that give an insight into your risk appetite are described below:
- Age: Your age is the single greatest indicator of your risk appetite. A young person will have a higher risk appetite when compared to an older person because of lesser responsibilities an a longer investment horizon.
- Investment Horizon:; people of the same age may not have the same risk appetite if their investment horizons are different. For example, a 30 year old with a 3 year investment horizon would have a lower risk appetite when compared to a 30.
- Personal Circumstances: it is possible that there is a change in your personal circumstances which might inspire you to change your strategy. For example, if there is an increase in liabilities, you might choose to take less risky assets so as to mitigate risk on your investments.
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| Your Asset Allocation |
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Current Asset Allocation
On analysis of your allocation , we observe that the Debt-Equity mix of your portfolio is:
Debt: 1% Equity: 99% |
Ideal Asset Allocation
Here is an asset mix that is ideal for your age, considering a 10-30 year time horizon and a moderate risk taking capacity:
Debt: 40% Equity :60 |
| Therefore, to achieve an ideal asset allocation, you will need to Decrease your equity component from 99% to 60%. You can do this by switching between the funds available in your policy. |
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Your Asset Allocation
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| Current Asset Allocation |
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