Asset Mix: All You Need To Know in Detail

When you are not aware of your financial goals , you can never get your asset mix right. This is because the mix depends largely on the goals you want to achieve. For long-term goals such as children’s higher education, their marriage, and retirement, you need to invest in instruments that can beat the effects of inflation.Similarly, for goals such as building an emergency corpus you need to park money in instruments that not only offer capital protection but can be easily accessed.

This is another mistake that you should avoid. Only when you have an accurate estimate of your risk appetite, would you be able to make the right calls. Often risk appetite is arrived at by answering a set of finite questions.However, more often than not those are not enough to give you an accurate projection of your risk tolerance. With properly estimating your risk tolerance, there are high chances of going haywire of your asset mix.

Getting caught in the trap of biases could greatly disturb your asset mix. In the world of investments, biases exist in various forms including recency bias, confirmation bias, trend-chasing bias, etc. All of these can prevent you from getting the right asset mix and therefore, you need to overcome them at the earliest.Invest in assets as per your life goals and risk appetite. When you have a clear vision of your goals and know the structure of an asset class, you can overcome biases. If you are finding it difficult to overcome them, get in touch with a financial advisor.

This is another mistake that you must avoid at all costs. For instance, while equities can deliver inflation-adjusted returns in the long run, this asset class can find it pretty challenging to beat its respective benchmark index every year by a large margin. Going wrong with asset mix has a lot to do with unrealistic expectations investors set from various asset classes. The right expectations could help you in making the right choices, essential for harbouring success. In conclusion Discipline, patience and a calculated approach could help you in finetuning your asset mix and get it right. The right asset mix is your path to financial freedom.

The information contained herein is generic in nature and is meant for educational purposes only. Nothing here is to be construed as an investment or financial or taxation advice nor to be considered as an invitation or solicitation or advertisement for any financial product. Readers are advised to exercise discretion and should seek independent professional advice prior to making any investment decision in relation to any financial product. Aditya Birla Capital Group is not liable for any decision arising out of the use of this information.