Skip to main content

Asset allocation - Basics

Invest Mutual Funds Online

Call 0 94 8300 8300 (India) 

You need to ensure your asset allocation ratio is always in line with your risk appetite. This is even more so when the markets are volatile. A sharp market movement can change the values of specific asset classes in a portfolio.


   As an investor, have you ever stuck to one product for your portfolio? Chances are no. You would have shifted from one investment option to another depending on the preference of your peer group. It could well have been debt in the 90s, equity in mid-2000, and gold in the last couple of years.


   Has the strategy been very effective? Yes and no could be the answer. It would have proved very effective if the timing was perfect and you would have got it all wrong if you had chased an investment product at the wrong time or at its peak. Adopting the second strategy is a lot easier than the first one. So, in effect, timing the market for any product is a challenging task. The best way to make use of different products is by following the asset allocation pattern.


   If the decision to allocate money across different products is a tough challenge, managing and maintaining it is even tougher a challenge. Due to variance in performances of different products, maintaining the percentage of allocation is even tougher. Hence, the asset allocation strategy requires greater discipline, better time management with respect to fund needs and long-term planning. While many know this, the challenge has been more with respect to implementation. Here are some tips to help you maintain asset allocation according to your needs:

Plan needs    

Plan your financial needs according to the short, medium and long terms. The classification will make the choice of product a lot easier. For instance, short-term needs can do away with products like property or equity, and focus on a narrow range of options.


   On the other hand, for long-term needs you need not worry about fluctuations in the performances of products in the short term.


Sustained monitoring    

Any wealth creation requires continuous focus and regular review. This could be in the form of sustained contribution at regular intervals or enhancing the contributions to the investment process. For instance, no investor can invest a sum of Rs 5 lakhs at one go for his long-term needs for the next 20-25 years in the current scenario. A 25-year-old professional may hate the prospect of investing on a monthly or annual basis for his retirement though he has the alternate option of investing Rs 20-25 lakhs at one go. At the age of 25, not many (you could even say nobody) will have access to such funds and hence, accumulation is the only option.


   It is in this context, that a regular review is a necessity, not because of the long-term nature of the investment process but also due to the change in investment capabilities of an investor. In 1995, there would have been only a handful of investors who had the ability to invest Rs 1 lakh on a monthly basis. Today, many middle income families have been managing to do that without a fret. Hence, it is important to scale up the investment amount at regular intervals to counter the inflation rate and take care of the long-term needs in life. The change is not restricted to the supply side (investment capabilities) as even the demand (fund needs) undergoes change at a rapid pace.

New options    

While asset allocation is a necessity, the basket of products needs to be reviewed, and additions and deletions may become a necessity at regular intervals. Since every decade has witnessed the emergence of new options, commitment to a single product over a very long period of time may not be feasible. Instead, move your money across products based on their risk profile.

Happy Investing!!

We can help. Call 0 94 8300 8300 (India)

Leave your comment with mail ID and we will answer them

OR

You can write back to us at PrajnaCapital [at] Gmail [dot] Com

 

---------------------------------------------

Invest Mutual Funds Online

Transact Mutual Fund Online

Download Mutual Fund Application Forms from all AMCs

Download Mutual Fund Application Forms

Best Performing Mutual Funds

    1. Largecap Funds Invest Online
      1. DSP BlackRock Top 100 Fund
      2. ICICI Prudential Focused Blue Chip Fund
      3. Birla Sun Life Front Line Equity Fund
    2. Large and Midcap Funds Invest Online

      1. ICICI Prudential Dynamic Plan
      2. HDFC Top 200 Fund
      3. UTI Dividend Yield Fund
    1. Mid and SmallCap Funds Invest Online

      1. Reliance Equity Opportunities Fund
      2. DSP BlackRock Small & Midcap Fund
      3. Sundaram Select Midcap
      4. IDFC Premier Equity Fund
    1. Small and MicroCap Funds Invest Online

      1. DSP BlackRock MicroCap Fund
    1. Sector Funds Invest Online

      1. Reliance Banking Fund
      2. Reliance Banking Fund
    1. Tax Saver Mutual  Funds  Invest Online
      1. ICICI Prudential Tax Plan
      2. HDFC Taxsaver
      3. DSP BlackRock Tax Saver Fund
      4. Reliance Tax Saver (ELSS) Fund
    2. Gold Mutual Funds Invest Online

      1. Relaince Gold Savings Fund
      2. ICICI Prudential Regular Gold Savings Fund
      3. HDFC Gold Fund

 

 

Popular posts from this blog

ULIP Review: ProGrowth Super II

  If you are interested in a death cover that's just big enough, HDFC SL ProGrowth Super II is something worth a try. The beauty is it has something for everybody — you name the risk profile, the category is right up there. But do a SWOT analysis of the basket, and the gloss fades     HDFC SL ProGrowth Super II is a type-II unit-linked insurance plan ( ULIP ). Launched in September 2010, this is a small ticket-size scheme with multiple rider options and adequate death cover. It offers five investment options (funds) — one in each category of large-cap equity, mid-cap equity, balanced, debt and money market fund. COST STRUCTURE: ProGrowth Super II is reasonably priced, with the premium allocation charge lower than most others in the category. However, the scheme's mortality charge is almost 60% that of LIC mortality table for those investing early in life. This charge reduces with age. BENEFITS: Investors can choose a sum assured between 10-40 times the annualised premium...

Am you Required to E-file Tax Return?

Download Tax Saving Mutual Fund Application Forms Invest In Tax Saving Mutual Funds Online Buy Gold Mutual Funds Leave a missed Call on 94 8300 8300   Am I Required to 'E-file' My Return? Yes, under the law you are required to e-file your return if your income for the year is Rs. 500,000 or more. Even if you are not required to e-file your return, it is advisable to do so for the following benefits: i) E-filing is environment friendly. ii) E-filing ensures certain validations before the return is filed. Therefore, e-returns are more accurate than the paper returns. iii) E-returns are processed faster than the paper returns. iv) E-filing can be done from the comfort of home/office and you do not have to stand in queue to e-file. v) E-returns can be accessed anytime from the tax department's e-filing portal. For further information contact Prajna Capit...

IDFC - Long term infrastructure bonds - Tranche 2

IDFC - Long term infrastructure bonds What are infrastructure bonds? In 2010, the government introduced a new section 80CCF under the Income Tax Act, 1961 (" Income Tax Act ") to provide for income tax deductions for subscription to long-term infrastructure bonds and pursuant to that the Central Board of Direct Taxes passed Notification No. 48/2010/F.No.149/84/2010-SO(TPL) dated July 9, 2010. These long term infrastructure bonds offer an additional window of tax deduction of investments up to Rs. 20,000 for the financial year 2010-11. This deduction is over and above the Rs 1 lakh deduction available under sections 80C, 80CCC and 80CCD read with section 80CCE of the Income Tax Act. Infrastructure bonds help in intermediating the retail investor's savings into infrastructure sector directly. Long term infrastructure Bonds by IDFC IDFC issued an earlier tranche of these long term infrastructure bonds on November 12, 2010. This is the second public issue of long-te...

Section 80CCD

Top SIP Funds Online   Income tax deduction under section 80CCD Under Income Tax, TaxPayers have the benefit of claiming several deductions. Out of the deduction avenues, Section 80CCD provides t axpayer deductions against investments made in specific sector s. Under Section 80CCD, an assessee is eligible to claim deductions against the contributions made to the National Pension Scheme or Atal Pension Yojana. Contributions made by an employer to National Pension Scheme are also eligible for deductions under the provisions of Section 80 CCD. In this article, we will take a look at the primary features of this section, the terms and conditions for claiming deductions, the eligibility to claim such deductions, and some of the commonly asked questions in this regard. There are two parts of Section 80CCD. Subsection 1 of this section refers to tax deductions for all assesses who are central government or state government employees, or self-employed or employed by any other employers. In...

Merger of Tata Indo-Global Infrastructure Fund with Tata Equity Opportunities Fund

Download Tax Saving Mutual Fund Application Forms Invest In Tax Saving Mutual Funds Online Buy Gold Mutual Funds Leave a missed Call on 94 8300 8300 Merger of Tata Indo-Global Infrastructure Fund with Tata Equity Opportunities Fund Tata Mutual Fund has decided to merge Tata Indo-Global Infrastructure Fund with Tata Equity Opportunities Fund, with effect from January 16, 2015.   Investors of Tata Indo-Global Infrastructure Fund can redeem/ switch out units from December 13, 2014 to January 12, 2015 without paying any exit load. For further information contact Prajna Capital on 94 8300 8300 by leaving a missed call Leave a missed Call on 94 8300 8300 Leave your comment with mail ID and we will answer them OR You can write back to us at PrajnaCapital [at] Gmail [dot] Com --------------------------------------------- Invest Mutual Funds Online Invest Any Mutual Fund Online Download Mutual Fund Application Forms from all AMCs Download Mutual Any Fund A...
Related Posts Plugin for WordPress, Blogger...
Invest in Tax Saving Mutual Funds Download Any Applications
Transact Mutual Funds Online Invest Online
Buy Gold Mutual Funds Invest Now