“The difference between success and failure is not which stock you buy or which piece of real estate you buy, it is asset allocation.” – Tony Robbins
Financial instruments can be very broadly divided into two categories – equity and debt. The primary objective of wealth creation is to generate a composite return on your overall portfolio that beats inflation over time.
In the long run, you can expect a return of 12-14% from equity instruments. Equity returns tend to be volatile in the short run. Debt instruments, on the other hand, generate an average return of 5-7%, often at par with inflation. Debt brings stability and safety to your portfolio.
Asset allocation determines the right balance between equity and debt for you. Once you have the proportion right, you can accomplish your goals fairly comfortably.
Quite simple, isn’t it? Now, let’s figure out what can be the right asset allocation for you.
Enter the current value of your investments against the fields where applicable.