Asset Allocation Calculator to help you allocate funds to best match
your Goals, Sep, 2018

Where all & how much should you invest your Rupee? It depends on your age, your purpose for investing & what type of investor you are. Find Out here!
Your Age(in years)
Year
Year for which you have to invest for your Goal
Year
Type Of Investor

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Introduction

Asset Allocation! What a bulky word. Let me try to explain simply. Asset is what you own. Here it means mainly the savings that you get which you can then invest to generate good Returns. Allocation is a simple English word which means how you distribute.
Asset allocation hence means how you allocate the spare funds you have into different instruments of investments – be it Equities, Mutual Funds, Real Estate, Gold, others.
For simplicity purposes we would keep the discussion related to allocation into various types of Mutual Funds.

Asset Allocation explained in cricketing analogy

In a game of cricket:

  1. Usually, could Rahul Dravid score at the same pace as Sehwag?
  2. When would a team play aggressively – if they have to score 150 in 50 overs or when they have to score              300 in 50 overs?
  3. Was Dhoni able to run the singles at the same pace 10 years back?

Seeking similarities with the game of investing:

  1. Dravid could never match Sehwag on the pace of scoring – similarly investors too are different.One could             be risk averse while the other may be able to take more risk while investing.Dravid would be picked up             for a Test Match while Sehwag was favourite for a one-dayers.
  2. A team would play aggressively when they have to score more runs in same number of overs available. A             investor – if he has a goal too big with not enough time – may have to take few calculated risks
  3. Yuvraj got slow with age – similarly when an investor is coming of age – his time frame to invest for goals             (like for kids education or kids marriage) would be limited. So he may have to choose investing strategies             given these limitations.

How to use this calculator

The Asset allocation calculator which is presented here helps you in easy funds allocation. You can just type in your age, the tenure (or the time period) you are looking to invest and what kind of investor you are. Are you a moderate investor who chooses to have medium risk? Or are you an aggressive investor who can take more risk by investing in equities? Or are you a conservative one who would earn less Returns but would play it very safe?

Once you input the parameters, the asset allocation calculator strategically calculates for you the percentage of your funds which should go under different schemes of return generating instruments, mainly mutual funds. This simple easy to use online asset allocation calculator does this by considering your age, taking ability, time frame & your goal.

Asset allocation explained in detail

Now this one is for the academicians. Asset allocation balances the risk and reward. This balancing is the most important aspect of financial planning. The risk that you can t depends on many factors. It depends on your income and expenses, it depends on your current liquidity position, it depends on your financial goals, among many other things. The best asset allocation can be done by a financial planner for you. This calculator is only an indicative guide for you to use. Please understand that risk cannot be eliminated from any investment. So what cannot be eliminated, we have to use that as an ally for our benefit.

So what do people associate mostly with risk when it comes to investing? Yes you got it right it is investing in equities. Investing in equities is a necessary evil. So let's try to use it for a benefit. I will give you a very good tool which is the rule of hundred to control this devil.

Rule of Hundred

Rule of hundred simply suggests that we subtract the investors age from hundred and the resulting number is the maximum percentage the investor should invest in equities. For example, 30 year old investor should invest 70% of his portfolio in equities or we could say that 70% of his asset allocation should be in equities or equity related product.

Trust me, with better health care we are going to live longer than our parents did. This also means that we need to make a investment last longer so that we do not die poor. Long-term play in investment always need to have allocation in equities.

For whatever goal we have,asset allocation for reaching that goal can be different from the Asset allocation which you need for your other goals. For eg., when you are doing your retirement planning which is a longer goal and where you have to keep money for a longer, the asset allocation will allow you to have less money in fixed income instruments like fixed deposits or debt Mutual Funds. But in case you are planning for a goal of going on foreign holidays in 2 years time, asset allocation will have you invest more portion in debt Mutual Funds.

Decide what kind of investor you are, have a goal in mind, and use this calculator. Done, I would strongly as you to connect with the list of experts you are seen on your right, any question you want or used more tools and calculators to help you get more clarity on your goals commerce planning, and financial health check-up which includes insurance also.

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