One of the secrets of building a high return portfolio is smart asset allocation.
Simply speaking, asset allocation is deciding how much of your investment is allocated to different asset classes and geographies.
- 30% of your portfolio could be in domestic equity,
- 20% of your portfolio could be in international assets,
- another 20% in mutual funds,
- 20% in debt securities,
- and 10% in gold or real estate
Different asset classes perform differently and so will give us a “balanced return” across market cycles.
The reason why we allocate our investments to different asset classes and geographies is to minimize the overall risk of the portfolio.
We achieve this by spreading our risk.
We should also spread our risk geographically by investing abroad.
This way we structure our portfolio to generate optimum return with decreased risk factor.
Investment abroad can gain from the investments themselves as well as through currency fluctuations, which make it very attractive option. Of course, it could work the other way also.
Presently, RBI allows an Indian citizen to invest upto USD 250,000 abroad in a single financial year.
Kristal provides an online platform using algorithms to bring the best international portfolios to you.