Here's How to Multiply your Money

Have the dough? Just sitting on it? Well then, just what are you doing to multiply it? Maybe you could take a leaf out of what HNIs (high net worth individuals) the world over are doing these days.

The answer is rather simple: the moneyed are just putting more stress on asset allocation in a bid to mitigate risk in highly-volatile markets and thus ensure a safe and consistent increase in wealth. Nice and simple, isn’t it? Read on.

The idea is catching on. And asset allocation has assumed more importance in the wake of investors across the globe increasingly demanding a more diversified approach and access to the world’s best investment products. A Cap Gemini Ernst & Young and Merrill Lynch report says that during the bull market, the concept of strategic asset allocation became unfashionable as equities produced record returns.

“However, when the market fell, HNIs became increasingly risk-averse and began to seek wealth preservation through strategic asset allocation and diversification,” the report adds.

Moreover, when you have tens of thousands of different financial products vying for your attention and choosing the best ones becomes a daunting challenge, asset allocation seems to be the only way out.

So just what does this entail? Put simply, asset allocation is nothing but a concept of determining and maintaining a plan of investment in terms of a chosen mix of investments in different assets such as bonds, stocks, real estate, and cash. The purpose: the reduction of risk by diversifying the portfolio.

It is common knowledge that each asset class has different levels of returns and risk. They also behave differently over time, while one asset may be increasing in value, another may be going down the hill, or just not increasing as much. It’s here that, asset allocation can help manage the risk of one’s portfolio.

Says Sumeet Vaid, chief marketing officer, OptiMix, a multi-manager investment solutions provider, “Asset allocation is about not putting all your eggs in one basket. It’s the ultimate protection should things go wrong in one investment class or sector, as is likely to be the case from time to time.” For example, many people loaded up on technology stocks in the late 1990s. However, when the market corrected in 2000, many of these investors experienced steep losses.

Now, if you so choose, you can put money into bonds, which are among the safest of investments. Yet the bond market, too, has its ups and downs. You may also put money in a money market account. However, though virtually bomb-proof, this market provides far lower returns Continue............Multiply Your Money Part-2


				*Here's How to Multiply your Money*



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