Asset allocation strategies from "summary" of Let's Talk Mutual Funds by Monika Halan
Asset allocation strategies are the bedrock of a successful investment plan. It involves spreading one's investable surplus across different asset classes. The idea behind asset allocation is to reduce risk by not putting all your eggs in one basket. Different asset classes do not move in tandem with each other. When one is up, the other may be down. By diversifying across asset classes, you reduce the risk of losing all your money at once. Each asset class has its own risk and return profile. Equities are risky but offer higher returns over the long term. Debt is less risky but offers lower returns. Gold is traditionally considered a safe haven during times of economic uncertainty. Real estate can provide rental income and capital appreciation. By combining different asset classes in your portfolio, you can balance out the risks and ...
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