How to do Asset Allocation the Right Way | Best Mutual Fund Asset Allocation Strategies | ETMONEY HD

Asset allocation is a very important element to successful investing. In this video, ETMONEY’s Shankar Nath takes you through what asset allocation really means as we detail three different asset allocation strategies that you can deploy on your investment portfolio starting today. This video will be packed with a lot of data and insights and comes with Hindi subtitles which you can access by tapping on the CC button What’s covered in this video? 00:00 Introduction 01:30 What is Asset Allocation 06:38 Strategic Asset Allocation 13:12 Tactical Asset Allocation 15:38 Useful Tips and Strategies Some Must Read Books for Your Money Library Rich Dad Poor Dad : https://amzn.to/3pJkVL1 The Psychology of Money : https://amzn.to/3FNI1Wd Learn to Earn : https://amzn.to/3FKmKg1 The Little Book That Still Beats the Market : https://amzn.to/3HvsKtN The Dhandho Investor : https://amzn.to/3mONPaG WHAT IS ASSET ALLOCATION? Asset allocation is the process of investing across diversified asset classes. There are two words one needs to focus on here - a) it’s a process and b) the assets are diversified. a) Asset allocation is a process because it is constantly looking to balance the risk and returns in an investor’s portfolio to achieve the better risk-adjusted return b) Diversified in the context of asset allocation means assets that are not correlated in terms of their performance. For example – a weak correlation can be seen when we compare the NIFTY 50 performance with that of Gold over a twenty-year period. STRATEGIC ASSET ALLOCATION Strategic Asset Allocation refers to techniques that are aimed at providing long-term focus to your investment portfolio. There are two commonly used approaches here. 1. Age-based asset allocation where the proportion of recommended equity assets in an investor’s portfolio is simply the balance of the investor’s age from a base value of 100. 2. Risk-profile-based asset allocation method which focuses on classifying an investor in one of five buckets i.e. conservative, income, balanced, growth, or aggressive investor. Each of these 5 labels signifies the amount of volatility that one can take in his or her portfolio. For example - a conservative investor is risk-averse and prefers a stable rate of return even if it means compromising on a little or a lot of returns. On the contrary, the aggressive investor is return-centric and understands the variable nature of performance where investments can rise and fall heavily over shorter time periods. Now, once the investor is classified, this asset allocation strategy goes on to proportion a fixed percentage of the asset class to each risk profile as we have explained in the video. In our study, we go on backtest the results with four asset classes i.e. domestic equities, international equities, bonds, and gold. This backtesting helped us prove the point that a balanced investor could have made comparable returns to a NIFTY 50 only investor but by t