Godmind Knowledge House
Asset Allocation and Diversification!
| As an investor you would always like to maximise returns with minimum of risk. In order to do this you tend to select the best posibile combination of investment instruments. In order to secure your future you have invested a certain amount in several investment instruments. What you did to increase return is actually called asset allocation and diversification. This is a process through which you tend to control the volatility while achieving targeted returns that beat inflation. |
| Asset allocation |
| Asset allocation is just investment jargon that means how the money in your portfolio gets divided up between the different asset classes. An asset class distinguishes one type of investment from another. |
| Diversification |
| Diversification is a method that determines how you divide your portfolio among different investments, as in equity, bonds, cash, etc. It is actually dividing your portfolio into different investments. |
| Re-balancing your portfolio |
| The only constant variable which doesnt change is 'change' itself. To keep up with the change all around, you need to align with the changes that is taking place. Aligning your portfolio with the change is portfolio rebalancing. |