Asset allocation is the process of allocating your investments in different asset classes like equity, debt, real estate, bullions, and so on. It is not enough to just invest your money, but doing it according to proper asset allocation is also important. The primary objective of asset allocation is risk management by diversifying one’s portfolio into different asset classes. It also helps in enhancing returns, managing volatility and liquidity in the portfolio. Broadly, financial planners recommend multiple asset classes so that if one asset falls, another or few others don’t fall as much. In fact, some may as well go up, and that helps your overall portfolio.
