Asset allocation refers to the allocation of investment funds between different asset classes according to investment demand, usually between low-risk and low-yield securities and high-risk and high-yield securities.

Asset allocation 432 1 principle

"432 1 rule" is an investment rule summarized by people in long-term financial planning, which is used to guide people to allocate funds when investing. Its contents are as follows:

40% of income is used for investment, creating wealth and increasing wealth. Such as buying real estate, financial insurance products, stocks or funds. ;

30% of income is used for family living expenses to ensure basic living consumption needs;

20% of the proceeds are used for bank deposits, and they are committed to preserving wealth while having rapid liquidity;

10% of the proceeds are used for insurance planning and life risk management.

"432 1 rule" is an investment rule with practical value. It is reasonable to consume family finance according to this law. Adopt a constant mixing strategy, that is, after the price of some assets rises, reduce the total amount of such assets and distribute them evenly among the remaining assets to maintain a constant ratio of 432 1. This is a scientific investment and financial management method to control the monthly income of families.

What should be considered in asset allocation?

1. Consider various factors that may affect investors' risk tolerance and income requirements, mainly including investors' age, investment cycle, asset status, financial change trend, risk preference and other factors;

2. Consider the market environment factors that may affect the risks and returns of various assets, including the international economic situation, domestic economic situation and development trend, inflation, interest rate changes, etc.

3. Consider the liquidity of assets and investors. For example, cash and money market instruments are often the most liquid assets, while real estate is the less liquid assets;

4. Considering the investment period, investors need to choose between assets with different maturity dates and make long-term plans;

5. Considering the tax, the tax result is of great significance to the investment decision, and investors should also pay attention to it.