It’s time to adopt an asset allocation model

Asset allocation i.e. the process of spreading your savings across different types of investment can help you find and maintain your balancing point and that goes a long way in pursuing your goals at a risk level you are comfortable with. For an asset allocation strategy to be successful, it must be flexible enough to accommodate the changes in one’s financial circumstances as well as the changes in the economic cycle. It is important because economic environment has a direct impact on the behaviour of the financial markets.
Circa 2010 is likely to pose challenges even for experienced investors. That’s why, determining and maintaining the right level of risk tolerance should be an important aspect of your investment strategy. Don’t make a mistake of underestimating risk and/or overestimating reward from an investment. In fact, estimating the risk associated with an investment option is more crucial than estimating the returns. By understanding investment risks and how they relate to potential returns, you can improve your chances of building greater wealth. Remember, mutual funds offer the best possible options to practice asset allocation and also provide you the flexibility required to make it a success.