Our asset allocation is the same. What kind of fund to match depends on your investment style, which only you know. In this issue, we will talk about how to use funds for asset allocation-"it varies from person to person". It can be roughly divided into three steps.
First, fully understand yourself and determine the investment style.
First of all, according to your age, personality, occupation and financial situation, determine your risk tolerance, that is, what is the maximum loss you can bear. Secondly, determine the investment goal and investment period, that is, when you want to achieve what purpose and how much money you need. Finally, according to the expected principal, the expected annualized rate of return is roughly calculated.
If the expected annualized rate of return is determined, it can help us roughly judge whether our investment style is conservative, steady, balanced, growth or enterprising.
For example: Xiao Wang is 26 years old, with an annual income (after tax) 1.5 million. He plans to decorate the house in three years with a budget of about 250 thousand. At present, 6000 yuan can be saved separately for investment every month. Investment knowledge and experience are relatively lacking. After testing, the risk tolerance is moderate, and the loss within 20% is acceptable.
After calculation, if you invest 6,000 yuan per month for 3 years, and after 3 years, the principal and interest will reach 250,000 yuan, then the annualized rate of return is expected to reach 10% (calculated by "regular quota calculator"). This rate of return demand is at least a balanced and growing investment style.
Second, establish a "strategic" asset allocation.
After defining the investment style, the next step is to determine the allocation ratio of each type of assets and establish an optimal long-term asset portfolio, which we call "strategic asset allocation".
As we said before, assets can be divided into cash, fixed income, equity and other substitutes. Here, I want to introduce the concept of "four sums of money".
Let's take Xiao Wang for example. If the allocation is "balanced", then cash management can account for 20%, steady investment accounts for 30%, then cash and fixed income investment accounts for 50%, and the remaining equity investment accounts for 50%. Among them, long-term investment can account for 30% and pension investment can account for 20%. So as to form a balanced configuration as a whole.
Note: Distribution ratio is for reference only. The above is just a "balanced" example. Everyone has different investment styles and different allocation ratios.
Third, implement "tactical" asset allocation.
After completing the "strategic" asset allocation, the next step is "tactical asset allocation", that is, determining the choice of specific products in each type of asset, and checking the products regularly or irregularly, and making adjustments when necessary.
I won't say much about the choice of specific products. In the course of Fund Trading Skills, we have introduced the selection methods and skills of different types of funds. If you are interested, you can go and see for yourself.
Here, I will focus on the fund. Good funds are tracked. There are many investors and friends who ignore the fund or just stare at the rise and fall of the fund's net value, which is wrong. Funds need to be checked regularly or irregularly. If the performance of the fund falls short of expectations and the fundamentals of the fund deteriorate, it is necessary to resolutely eliminate and correct the mistakes and re-select the fund.
Summary:
Each team has its own formation and style of play, and everyone has their own asset allocation formation.
First of all, fully understand yourself and determine the investment style; Secondly, establish a "strategic" asset allocation, that is, determine the allocation ratio of each type of asset;
Finally, implement "tactical" asset allocation, select excellent targets, and make timely adjustments.