By: Helmi Hakim
It is COMMON in the finance world for us to hear these jargons like “assets allocation“, “rebalancing” etc2…
In this post, I will like to share with you 2 COMMON approaches, financial planners use to allocate assets of our clients efficiently and effectively.
1) Strategic Assets Allocation
Example: If my client get NTUC Income flexilink policy, and invest 60% equities and 40% bonds in his investment portfolio.
Assuming that because of economic downturn, his equities allocation subsequently reduced to 50%. If I were to adopt the strategic assets allocation method, I will seek my client to buy additional 10% equities to rebalanced his portfolio.
2) Tactical Assets Allocation
Meanwhile a financial planner who adopt the tactical assets allocation, will employ, market prediction, timing, to change the asset mix in his client’s portfolio.