For most of the educated people and especially for those who do not have anything to do with finance at their work places, asset allocation is apparently a puzzling term.
There are broadly five types of asset classes viz debt, equity, commodities (understood mainly as gold and silver), real estate and cash. In each of these asset classes there are various instruments or investment options available in the market
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When Krishna Patel and his son Amit (names changed) walked into our office, they had a simple problem: The senior Patel (59) was to retire in a year’s time and needed to effectively use his retirement corpus.
The father expected his provident fund (PF) maturity to be around Rs 60 lakh. He had a fixed deposit (FD) balance of Rs 10 lakh, about Rs 1 lakh in savings account, an equity portfolio of around Rs 4 lakh and owned a small, self-occupied flat in the Mumbai suburb of Vile Parle. He had a personal health insurance cover of Rs 5 lakh that also covered his wife (56), a homemaker.
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