Asset Allocation Strategies

Asset allocation can be defined as an investment strategy through which one allocates his or her portfolio among various asset class like equity, commodities, cash etc….There are many approaches or strategies to asset allocation, let’s look at some of them –

1. 100 minus your age method – According to this method the percentage of one’s total investments in equities should be 100 less your present age that if your age is 20 years than you should invest 80 percent of your investment in equities and 20 percent in bonds or fixed yielding securities.

2. Financial objectives method – Under this method one should allocate his or her investments according to future financial needs, so if one expects in near future some expenditure then he or she should go for short term deposits so that expenditure can be met, However if one expects that there will be no near future expenditure, than one can go for long term investments.

3. Risk tolerance method – According to this method one should make the investments according to his or her risk taking capabilities, that if one is risk taker then he or she can go for equities, however one does not want to take any risk then he or she should invest in fixed income securities and stay away from stock markets.

4. Cash flow needs method – This method involves projecting future cash flows of an individual and estimating the deficit and then planning the investments accordingly.

0 comments… add one

Leave a Comment

Related pages

horizontal integration disadvantagesbalance sheet disadvantagesadvantages of fiicomplements and substitutes economicsexamples of inferior goods and normal goodsbenifits of ppfdisadvantages of financial accountingretail vs wholesale definitiondisadvantages of economic value addedskimming pricing strategy examplesdisadvantages of cashless societyadvantages of venture capitalistadvantages and disadvantages of communismsundry assets definitionformula of operating leveragea study of non operating expenses of proprietary concernwhat are inferior goods examplesadvantages and disadvantages of oligopolybills of discountingexamples of normal goods and inferior goodsbarter system meansnegatives of monopoliesmerits of decentralisationexamples current liabilitiesexample of a horizontal mergerdisadvantages of traditional bankingbenefits of barteringwhat are the advantages of traditional economydisadvantages of delegation of authorityprepaid expense entrytypes of mergers and acquisitions with examples pptexample of conglomerate integrationdrawer and draweeobjective of trial balancemonopoly and oligopoly market structurespredetermine definitionadvantages and disadvantages of a joint venturedefinition of consignorsemi finished goods examplesfdi advantages and disadvantagessubstitute goods and complementary goods examplesadvantages and disadvantages of pricing strategiesadvantages and disadvantages of a joint venturedefine unitary elasticadjusting entries for prepaid expensesdisadvantages and advantages of communismadvantages and disadvantages of command economyautocratic coaching styleskim pricingwhat is a conglomerate in economicsrelevant costing for managerial decisionsautocratic leadershipunearned fees adjusting entrydisadvantages of fdiwhat is the difference between a tariff and a quotahow to find errors in trial balanceperpetual sucessionhorizontal analysis of financial statementsadvantage of a mixed economycontingent liabilities on balance sheetaccounting conventions definitionforeign exchange quotationdecentralization of authoritypros of command economydifference between bearer cheque and order chequeadvantages of money over barter systembank reconciliation statement is prepared bydefine a mixed economyfdi and fii meaningdistinguish between systematic and unsystematic riskadvantages of promotional pricingadvantages and disadvantages of earned value analysismutual funds advantages disadvantages