Money tips! Planned asset allocation strategy can help you become rich; Here is how
All investors want to become rich or even a crorepati, but they don't want to do what's required to achieve this investment goal.
All investors want to become rich, but they don't want to do what's required to achieve this investment goal. Most of the time, it has been found that an investor is completely ignorant of the road map that would help him or her achieve their investment goal. According to tax and investment experts, there is a need for a foolproof investment strategy where one can maximise the worth of one's money. So, an investor should first make an asset allocation strategy and then start his or her investment.
Speaking on the role of asset allocation strategy in wealth creation Hemant Rustagi, CEO at Wise Invest Advisors said, "For a foolproof asset allocation strategy, first and foremost thing is to calculate the risk factor in one's investment. Apart from this, investment should be one's habit and this can happen only when there is a discipline in investment. Expecting higher returns is not bad but not knowing the higher returns involves higher risk is bad. So, to achieve one's investment goal, one has to strike a balance between the investment goal and one's risk appetite. If the investment goal is high, then one will have to enhance one's risk appetite." Rustagi said that an investor must know the relationship between risk and reward. For higher rewards, one has to take higher risk, said Rustagi.
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Speaking on diversification in one's asset allocation in portfolio Rustagi said, "Diversification of the portfolio is an important factor in one's investment planning, but most of the time it has been found that an investor over diversifies portfolio in the name of diversification. The best diversification of one's portfolio is to have 7-8 plans in debt, small-cap, mid-cap, large-cap and multi-cap funds." For long-term investment goals like child marriage, retirement fund, etc. small-cap mutual funds are better suited to meet the investment goal as these are long-term investment goals. For short-term investment goals, debt mutual funds are better suited for an investor.
Asking an investor to keep inflation factor in one's asset allocation strategy Rustagi said, "While making an investment, one needs to keep the inflation factor in mind. With the passing of time, a rise in inflation would lead to a rise in the current price of one's investment goal. So, one should also assess the price of the investment goal with the rise in inflation while fixing the investment goal at the time of asset allocation."