Asset Allocation is the act of allocating portions of an investment portfolio to multiple asset classes. This defines your investment journey, your experience and your final investment outcome.

If you don’t get the asset class right, you might as well not make a financial plan. The choice of asset class makes the biggest difference compared to anything else. Just observe the data below.

An investment of Rs. 10 lakhs, made in September 2012, in each of the below asset classes results in the following outcomes:

Each asset class has different characteristics, and the interplay between each is quite interesting.

Mixing more than one asset class in a portfolio results in a better investing experience and outcomes.

What matters the most while investing? 

The most important thing is having the right asset allocation in the portfolio per your risk profile. Being in the right asset class is the most important decision. 

Not participating in the right asset class, and perhaps more importantly, the right mix of asset classes impacts final outcomes more than any other decision. How the investment journey progresses, and ends, will almost always depend on the mix of asset classes and in what proportion are they chosen.

After that, it is about reviewing the allocation and rebalancing the portfolio (if required). 

What is the Scripbox recommended allocation grid?

Let’s see how the asset allocations played out in the past based if they were held for any 10-year period over the past 24 years.