Asset Allocation: Cornerstone Of Successful Investing

The saying, don’t put all your eggs in one basket, is a commonly used phrase in investing. The idea here is to drive home the importance of diversification. Often, when it comes to constructing a portfolio, investors tend to pile up on the asset they most favour. As a result, what one gets is a skewed portfolio. In case of any extreme market development in that particular asset class, the portfolio is bound to be badly affected. So, what is it that an investor can do to prepare a balanced portfolio? The answer lies in getting asset allocation right. Asset allocation is the act of spreading money across various asset classes like equity, debt, gold, etc. in line with one’s risk appetite and financial goals. Each asset class has a unique role to play. While equity brings in the growth element, debt provides capital protection and gold provides a hedge against inflation and...