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Asset Allocation
Asset allocation is the most important decision that any investor needs to face, and there is no one-size-fits-all solution that can work for each and every investor. By asset allocation, we mean spreading the investorâs total investment amount over certain assets (be it stocks, options, bonds, or any other financial instruments). When considering the allocation, the investor wants to balance the risk and the potential reward. At the same time, the allocation is dependent on factors such as the individual goals (expected return), risk tolerance (how much risk the investor is willing to accept), or the investment horizon (short-or long-term investment).
The key framework in asset allocation is the modern portfolio theory ...
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