ASSET ALLOCATION
Drivers Of Investment Performance
Market When and how to tilt. Sizing exit
Timing rules.
Security Selection What to specifically buy in each asset
Asset Allocation Mix of assets and what %
Asset Class Investment
Cash 0%
FD 3-5%
Debt Fund Collection of bond 6-8%
from different
companies
Gold 6%
Real Estate 7-8%
Equity 12%
Crypto 15%
Alternate Assets 8%
MODERN PORTFOLIO THEORY
Efficient Frontier PF offering
Crypto
minimum risk for desired
EXPECTED RETURN return
Min Risk PF
meeting required
return
Stocks
Real Estate
Gold
Bonds
Max Return with available
assets for minimum risk
Cash
STANDARD DEVIATION (“RISK”)
BEST ALLOCATION STRATERGY
Equal allocation done on the following four categories
Indian Equities
Debt
Gold
International Equities
In a span of 30 years, the equal allocation strategy performs equally
well at hell than half the volatility, and lower drawdowns.
Equal allocation strategy outperforms in only 13 out of 31 years but
by avoiding the worst years, it delivers comparable returns at lower
volatility.
FINANCIAL GOALS Key Takeaways
1. Home Avoid keeping excss money in savings account and start
2. Cars investing early
3. Domestic and internation vacations Equity is one of the few asse classes which has consistently
4. Electronic Gadgets beaten inflation
5. Marriage Diversification across asset classes is necessary to improve
6. Higher Education risk adjusted returns
7. Child Planning List out your financial goals to build your own customized
8. Retirement Planning asset allocation
9. Emergency Funds Asset allocation is not a one time activity and has to be
rebalanced
Goal Objective Allocation
Short Term Goal Emergency 100% Debt
(1-3 Years) Funds
Vacations
Electronic
Gadget
Higher Education
Medium Term Car 40% Domestic Equity
Goal (3-6 Years) Home 60% Debt
Marriage
Long Term Goal Retirement 40% - Domestic Equity
Kid’s education 20% - US Equity
Kid’s Marriage 20% - Debt
05% - Gold
05% - REITs
05% - Crypto (option)
05% - Alt Asset (opt)
RULES TO BUY A CAR
10. Car value shouldn’t be more than 6 months of post tax
salary
11. Don’t buy a car on loan as interest rates are too high. Only
buy if you have cash.
12. If you’re a business owner or self-employed then buying a
car makes sense since it can give you tax benefits on
depreciation cost and interest payments