_Asset Allocation_ – text book definition….. an investment strategy that aims to balance risk and reward by apportioning a portfolio’s assets according to an individual’s goals, risk tolerance, and investment horizon.
Wow…that looks seriously tough for a common man to understand
In simpler terms….
*_Asset Allocation_ is nothing but, _investing money in a common sensical way_*
That’s just allocating money into the 4 avenues…..
Equities
Fixed Income
Real Estate
Gold / Commodities etc.
_*The ratio of allocation among these 4 asset classes is based on ONE’S NEED (short, medium & long term)*_
_RETURNS_ are immaterial here, but the _RISK_ is quite material.
_*DOES IT SUIT MY NEEDS IN THE SHORT & LONG TERM OR NOT?*_
_Nothing else matters_ ?