LEARNING CENTER
Level | Beginner

WHAT IS ASSET ALLOCATION? WHY DO YOU NEED IT?

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Key Takaways

  1. Asset allocation involves allocating specified percentages of your total investment corpus to the various identified asset classes.

  2. The allocation to each asset class is determined by your risk profile (risk capacity, risk tolerance and the actual risk you have to take).

  3. The key idea behind asset allocation is balancing the risk taken with the potential rewards.

  4. Periodic rebalancing to bring back the portfolio to your stipulated asset allocation is important to minimize investment risk.