After more than a year blogging about personal finance and investments, I am surprised that something as important as asset allocation has never been directly addressed in any of the posts. To be fair, I have talked about the importance of holding some cash so that I could sleep better at night. But that’s really just scraping the surface of this important issue.
Many studies (an example here) have shown that for most investors, asset allocation plays a bigger factor in returns as compared to the individual stocks that we select in the portfolio. And since I do share my portfolio of passive income, not going deeper into asset allocation does come across as a tad irresponsible.
So here’s a closer look at this topic in greater detail:
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Why do we need an asset allocation strategy?
In case you’re lost, equities/stocks is just one of many asset classes. There’s hard assets (gold, silver ...
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