Asset Allocation Investment


There are many factors that cause a person's success or fail in investing. One of the most decisive factors is the strategy or how to allocate investment assets.

Say you have a fund of USD 1 million. And your friend also has the same amount of funds. Then both of you equally invested. Certainly, the results of these investments will be different.

Let's say, you and your friend are both diversifying aka "don't put all your eggs in one basket". That is, USD 1 million fund that bought stocks, bonds, mutual funds, land, and possibly gold. Thus, whether the result will be the same? No, because the stock is purchased may differ.

Or even buy the same stocks, but a period of investments in shares that are not the same. You're only 6 months, while your friends may be 1 year. In fact, although the choice of the same instrument, but if different investment time frame, the result could be different.

Therefore, diversification alone is far from enough to be able to achieve success in investing. Moreover, diversification must be followed by a calculation about how much the allocation of funds in each investment instruments. This is what probably differentiates you with your friends.

In addition, the allocation also must be followed with the time horizon of the investment are clear, that is, whether for short, medium, and long. Then, in the asset allocation, billed as a portfolio investment, you must decide whether to use an active investment approach or a passive investment.

Asset Allocation
Asset allocation is an investment in fact by doing a different classification for each type of asset, the classification that consists of different types of investments, amounts, risk, profit potential, time period, and also how to manage the investment itself.

There is an investment in the form of real products or on the real sector and investment in the form of "worthless paper" listed on the capital market. In this case, including but not limited to, on stocks, bonds, mutual funds, indices, and so on.

Asset Allocation Investment

The choice of the investment asset allocation course should be tailored to the purpose of the investment itself. In General, investors want a big return of each type of investments made. And return the high achieved in the short term. However, there also want a stable outcome in a long period of time. DUS, different investment objectives will produce different investment allocation strategy.

After you make sure your investment objectives, then later sort out the relevant investment asset allocation and simultaneously takes into account the risk and yield expectations are contained in the specified type of investment. Let's say, you sort of investment assets to 50 percent in the real sector and 50 percent in the capital markets. For the real sector, you parse into property, land, etc. In this case, you also make sure how many years of investment in the real sector will you hold.

Meanwhile, the 50 percent again allocated to stocks, bonds, and mutual funds. The amount of investment each instrument on that of course depends also on risk taking capacity attached to you. If you are a risk taker and short-term -oriented medium, certainly shares could be the greatest choice.

Diversification
When you allocate funds for investment in stocks, then what kind of stocks you buy? In which sector? You should also diversify further. First, the stock funds you on some sectors of the economy. Then, top-tier shares for good in the medium term for stock dividends and certainty in the second tier of promising potential for capital gains.

Second, the sort of mutual funds that you buy in a few types, namely mutual funds of stocks, bonds, mutual funds and mutual fund mix. Third, you can also buy retail bonds issued by the Government, the risk is very low.

After you allocate funds on any type of investment, then the next one was, are you going to invest passively or actively. If the investment is passive, the fate of your investment will rely entirely on market movements. For stocks, for example, if a stock is experiencing price movement and then you remove it, then you will be elections caused a big advantage.

Likewise with stock mutual funds, if the index increases the value of assets value (NAV) of mutual funds are also on the rise. However, if stock prices fall, your investment will also fall. In a nutshell, all depend on the movement of the market with the most basic concept, namely, buy low sell high.

However, if you have the guts and also sufficient investment capabilities, you can also choose an active investment strategy. This means that the success or failure of your investment and not completely dependent market, but rather to take the initiative yourself in anyway, regardless of market conditions.

For example, when stock prices tumbling and perhaps including stocks you own, then your actions is not selling the shares it bought back, but, even in larger quantities. Or second-tier stocks you buy, that you believe have great potential to move, although other investors less interested. The same thing also applies to mutual funds and bonds. You actively trade and exchange of this type of investment instrument that you believe has the potential capital gains in your investment horizon.

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