How to Manage Asset Allocation

http://indahkeluargaku.blogspot.com/2012/04/how-to-manage-asset-allocation.html

Actually, asset allocation is a kind of financial arrangements which avoid capital investment into single kind of business. Like eggs which are forbidden to put them all in a certain basket, choosing to invest all equity fund into single kind of business would be too risky because of its greater loss which possibly occurred.

The main purpose of asset allocation determination is actually to help the retirements’ income in a future. In fact, the spent money of asset allocation investment depends on the time period retirement plan. For those who plan to retire in a long time period would have different percentages of money investment to those who have shorter period of retirement plan.

Before further discussion, it would be important to understand well of investment types. There are 3 investment types can be chosen basically on the risk factor and the point of return on investment and they are safe investment, medium investment and high risk investments. Safe investment is a kind of investment has success rate up to 99% while have lower return on investment between 6%-7%. Medium investment is a kind of investment has 75% success rate while have 20%-30% point of return on investment, whereas high risk investment is a type of investment has success rate of 40%-50% while the return on investment reaches 50%-80%. After several knowledge of investment above, the asset allocation fund investment can be determined as follow:

• For those who have planned on 40 years of retirement, it would be great idea to invest their money into 25% of safe investment, 20% of medium investment and 10% of high risk investment.
• For those who have planned on 25 years of retirement, it would be great idea to invest their money into 40% of safe investment, 10% of medium investment and 5% of high risk investment.
• For those who have planned on 10 years of retirement, it would be great idea to invest their money into 55% of safe investment, 5% of medium investment and 2% of high risk investment.

Several tips being shown above may help solving some problems in determining the magnitude of asset allocation. Actually there are no standards on the certain amount of invested money. All depends on the person’s type such as moderate, conservative or traditional.