Asset Allocation and You
By Saghir A. Aslam
Rawalpindi, Pakistan
(The following information is provided solely to educate the Muslim community about investing and financial planning. It is hoped that the Ummah will benefit from this effort through greater financial empowerment, enabling the community to live in security and dignity and fulfill their religious and moral obligations towards charitable activities)
Asset allocation in simple words means dividing your money among different asset classes, such as stocks, bonds, and cash or cash equivalents. I would definitely add real estate. In order to balance your expected rate of return against a level of risk with which you are comfortable. You may also want to consider precious metals and managed future, this sector usually performs debits in bear market, but not always.
In practice, asset allocation can be complex. If investors keep a few basics in mind, understanding and implementing a personalized asset allocation strategy can be the key factor in pursuing your wealth management goals.
What You Need to Do
- Identify your goals clearly.
- Develop and implement an investment plan.
- Make saving an integral part of your budget.
- Review and update your plan regularly.
- Commit yourself to continuous learning.
These factors all revolve around a comprehensive asset allocation plan, one that is personalized for you, yet also uses the most up-to-date, professional techniques to help define return and risk variables for each investment choice. The first thing you need to do is research, study, study some more, check references, and find yourself an appropriate, seasoned, experienced, and well-balanced financial adviser.
Understanding yourself and your goals
The personal side of asset allocation is what you bring to the table and what only you can determine. Once you have figured out your side of the equation, then you can work with your Financial Advisor and come to an agreement on the professional side of the asset allocation process: exactly which investments will go into your portfolio.
Setting the Stage
Two important personal assessments need to be made before you implement a plan.
Carefully and honestly define your short- and long-term goals. I have learned that your success as an investor will, in large part, be determine by:
How will you define your goals?
The investment style you favor,
And
The level of risk with which you can live.
Remember, be honest about your self-evaluation, it isn’t a contest, nor should it be inflexible. Reassess and update your goals at least once a year or whenever a significant event occurs, such as the birth of a child or the sale of a business. It is extremely important that you do this regularly.
A new personal situation, financial or otherwise may alter the level of investment risk you can tolerate and require some changes in your asset allocation percentages. As the family situation changes, so do your goals.
(Saghir A. Aslam only explains strategies and formulas that he has been using. He is merely providing information, and NO ADVICE is given. Mr Aslam does not endorse or recommend any broker, brokerage firm, or any investment at all, nor does he suggest that anyone will earn a profit when or if they purchase stocks, bonds or any other investments. All stocks or investment vehicles mentioned are for illustrative purposes only. Mr Aslam is not an attorney, accountant, real estate broker, stockbroker, investment advisor, or certified financial planner. Mr Aslam does not have anything for sale.)
