Macro Moves

An exclusive guide to asset allocation

Created on 25 May 2020

Wraps up in 4 Min

Read by 5.3k people

Updated on 27 Aug 2020

Investing is incomplete without proper asset allocation. 90% of the portfolio which has shown good performances in the past years points their victory towards effective asset allocation. Say you have brought a 2BHK flat having a fantastic view. Do you think that your work is done with that? You will modify it according to your desires, you will paint it, add furniture and so on. Similarly, investing It is not a one-time action rather a recurring process. When you decide on investing it is essential that you plan it well and then execute it. In short this Guide to Asset Allocation is a tool that investors utilize, to align their investments in line with their risk appetite, goals, and return expectations. 

Is it difficult and does it require enormous knowledge? How do you do it all by yourself? To be honest it is not a big deal at all. Let me guide you through the steps to good asset allocation. through this asset allocation guide.

Where you see yourself in the future

Everything we do has a motive behind it. “Investing” is not an exception. You have to find the objective or goals for which you are about to invest. For instance, say you want to buy a brand new car which is a short term goal. In that case, your portfolio should contain a huge portion in the form of equity investment. Contrary to that if you invest in something which might take a long time to mature than your desire will be nothing more than a desire.  Every wish of yours is bound by time. Hence, understanding your financial obligations or goals will help you picturise the time required to accomplish it. Once you realize the nature of financial goals and the time needed for it, planning for the same becomes easy. 

Or simply use the Finology calculators: Financial Calculators

Investment Goals: What you want out of your investment? 

After having sorted out the goal and the time you will need to succeed, you can move on to the next step. This is the most crucial step where the majority of us go wrong.  We expect unrealistic returns. In short, we let emotions plan for us rather than our brains. Remember, greedy investors, dig their graves. Hence, be practical and make accurate calculations as to how much you will need. Taking an unwanted risk can land you in trouble. So take that risk which is necessary. 

For example, you are newly married. You want to start investing for your retirement. In that case, you can be exposed to equity or any other risky investments. Investing a small portion of your investment into sectoral or thematic funds will not hurt you badly. But if you are a senior citizen then you should look for investments where the risk element is comparatively low. You may go in for debt, PPF, or hybrid funds. Adding the right components to your portfolio that would generate the required returns is essential.   

portfolio diversification: Spread your risk 

Another important aspect is to keep your money on different baskets. Therefore, if the damage to one basket will not affect your other baskets entirely. Having a perfectly defined goal and calculated returns in hand if you go ahead investing all your savings in a single avenue, you will have to lose almost everything. Diversification of a portfolio is the essence of a good performing portfolio. 

 Say I had invested a part of my money in growth funds and another part in gold or related securities. When the economy performs badly and the growth is hindered I would lose my money which is invested in growth funds. But my investment in gold-related securities would offset the losses. 

Why not use technology- financial calculators

Calculating the returns or period can be irritating if done manually. But you don’t have to worry about that. Nowadays financial calculations can be done with the use of excel sheets. Just type in some basic info and unravel answers to your complicated problems. Or otherwise use the help of Finology’s idea bag. The service has aided 5000+ investors to plan their financial portfolio. Important updates, well-researched reports, alerts as to when to sell, effective portfolio diversification are few perks attached to it. So why not give it a try. 

Just click here: Learn Portfolio Diversification

Do it all over again 

Once you have allocated your portfolio, you cannot leave it unnoticed totally forgetting all about it. You will have to keep a keen eye on the market and look for opportunities or any possible pitfall. Constantly review and rebalance it. Let us assume that you and your friend invested initially in some equity-related investments. You never bothered to reallocate or make changes in your portfolio concerning time. But your friend, on the other hand, used every opportunity and reallocated and revised the portfolio from time to time. Who do you think would have made more money? Your friend.  


Investing may not be as difficult as it portrays itself to be,  provided you handle it the right way. A few simple steps can make your dreams come true. Asset allocation is one of the many mantras that will help you see good gains. It helps you save your hard heard money from serious mistakes. Having said that it is time you implement all of these techniques right away. 

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Ayushi Upadhyay

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A Keen Learner. Tiny, brainy, and studious, this quiet one stays in her zone until she pops. And once she does, boy, are her comebacks snappy! There is no financial question that she can't answer through her magical blog-writing. 

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