What is asset allocation strategy?

 

 Asset allocation strategy is the process through which an individual's total investible fund is divided into various assets like equity, bond, gold, real estate, cash etc. after considering hisher investment goals, risk profile and investment timeframe. It's a process that balances risks and reward for an individual aiming for long term wealth creation. The process is based on the fact that different asset classes perform differently over the same time horizon. Since the asset allocation is a dynamic process, that is it varies from person to person, there is no set rule for asset allocation. However, most financial planners and advisors believe that for an individual to create wealth in the long run, asset allocation matters more than selection of stocks and other assets in the portfolio.