Monday, 6 August 2012

[] Tips for a realistic Asset Allocation


The first tip for asset allocation management is to diversify your investment. Putting all your eggs inside one basket is too much a risk.  So do not invest all your money in one company, expecting to generate cores of rupees in revenue.  Strategic asset allocation requires diversification.

If you want to invest in various assets, assign a determined percentage. Suppose you wish to invest in share market, since it is a risky investment, you should balance it with other, less risky assets. For example, Government Bonds, NSC, PPF, Bank Term Deposits etc. They may have a low return over investment (ROI), but you can be pretty sure that they will pay you what they promised.

The second tip is to find a group of asset allocation tools that can help you in your decisions. For example, one of those tools is the internet. The World Wide Web is an excellent source of information. You can find the investments opportunities available at all over the world.   Plus, you will be able to recollect the latest news in the geopolitical situation at different parts of the world.
The world is an ever changing place, so it is in your best interest to maintain yourself informed. Another practical tool is an asset allocation calculator. The difference between a typical calculator and this application is that it will help you decide in which way you should make your investments. And, it can make a projection on how much money are you going to receive after a determined number of years.

Finally, there is paid and free asset allocation software. In the case of the first one, they can be pretty complex pieces of software. They may use different mode of calculations and predications. Before considering buying one of these packages, make a thorough research and determine if you really need them. In the case of free software, forget about it. There is no way in which someone will invest so much time in decent asset allocation software and then distribute it for free. Those kinds of things may happen with computer games, but not with investment software.   I never recommend to buy software for planning your asset allocation, the main defects of this software is, again you need to be an expert in operating this software.  In case you failed to operate this software as per the direction, definitely the result will be wrong and misleading.  Finally you will end up with a wrong asset allocation   which will defect  the entire objectives of a financial planning and proper asset allocation.

Optimizing strategic asset allocation should be the priority of every person who wants to have an untroubled future for him and his family. Although determining which are the correct asset allocation models isn't easy. In case you aren't able to determine the best strategic asset allocation, you can always look for an expert financial planner, for a fee, is willing to do so.
Best Regards
Prakash Nair

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