Showing posts with the label asset allocation

Drawbacks of Investing in a Single Investment product

  Drawbacks of Investing in a Single Investment product It is common nature for any investment product to experience ups and downs over a period or time or cyclically. If we can predict this easily - in fact it's not. Hard to predict even with enough skill and insider information.  There are few disadvantages of investing the entire amount in a single investment product or avenue,  Chances of Losing the investment value drastically are very high The problem with receiving the Targeted or Goal amount in a certain period, the amount may be low Investment Risk is very high when invest in a Single product Missing the Opportunity cost of any other investment product which gives good returns False Predictability about the Market or Herd Mentality Asset Allocation and Diversification - both are very important on Investing Life. This will reduce the investment risk and increase the chances of generating better returns. In the long run, invest in a single instrument is not only the huge ris

Portfolio Insurance - Why is it necessary ?

 Portfolio Insurance - Why is it necessary ?  There is no such thing as a Risk-free investment today. Rather than avoiding the fact that there is risk in investing in general, one should know how to handle risk properly. Investment risk can be minimized through asset allocation and Diversification.  Decentralization is when you are in a position to invest (Say One Lakh rupees), without simply investing in the Bank Deposits or in the Equity Market as a whole, but in a combination of asset allocation like Deposits, Stocks, Gold and Bonds. This way even if the Stock market goes down, your either investment instruments will provide the corresponding returns and give investment protection. At the same time while other investments are not able to reach the required returns that exceed inflation rate, Stock Market boom will increase your investment multiplier. Usually when the interest rates are low in Banks, then the rates are slightly higher in Bonds. As the Stock Market declines as a Major