Invest UBUNTU way !! Proper Asset allocation will make the difference to your portfolio !!!
Investment decision from the Analogy of Life
When it comes to investing, what matters is Understanding, attitude and discipline.
Let us learn this from a small story …
An Anthropologist proposed one Game to the kids of African Tribal Children. He placed a Basket of Fruits near a tree...and made them stand 100 meters away. He announced that whoever reaches first would get all the Fruits in the Basket.
When he said ready... steady... go...Do you know what these small Children did?
They all caught each other's Hands and ran towards the Tree together, divided the Fruits among them and ate the fruits and enjoyed it.
When the Anthropologist asked them why you did so? They said 'Ubuntu'
which meant: -'How can one be happy when all the others are Sad?'
Ubuntu in their language means: - 'I am because, we are!'.
Message for the investors is
"Don't run to win singly- with single asset class".
Avoid Single asset Class temptation
It’s proven fact that different asset classes (Equity, Fixed Income, Gold, Real Assets etc.) perform at different times. People are tempted to run the race with single asset class which ever:-
· Looks more attractive at that instance.
· Is of their type (Aggressive, Conservative).
The problem with many is that when the asset class they are in do not work to their expectation, then the book loss and switch to the other asset class which they feel is promising (since it is performing).
How much % should I’ve in each asset class?
This is the Job of your Financial Planner. Leave it to an expert. He will tell you after doing your Risk Tolerance (Risk Profiling) as to
· How much risk you can bear?.
· What is suitable allocation for you?
Never start buying the products before deciding asset allocation. Don’t risk your assets in market before doing your risk tolerance.
Allocate and Relax
Many investors who were risk averse avoided Equity till 2006 and when it got heated up, they entered in Equity market in 2007. They made “Near inflation Gains” (Effective returns Zero) till then in Debt. After Financial carnage of 2008, they booked loss in 2009 and shifted to Debt again. When Gold started showing its glitter, many of them shifted to Gold and recently they booked the loss when they discovered that gold is no more a safe heaven & equities have started moving. What is this …..?
Remember Ubuntu. You will win only when all (assets in proper proportion) run together. You need to have all asset classes in your portfolio to have a proper balance of Risk & Reward.
Image credits
Web-books.com | Gettyimages.com
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