Page 105 - DMGT515_PERSONAL_FINANCIAL_PLANNING

Personal Financial Planning Mahesh Kumar Sarva, Lovely Professional University

Notes Unit 6: Investment Strategies-I

CONTENTS
Objectives
Introduction

6.1 Asset Allocation
6.1.1 Asset Classes
6.1.2 Diversification: The Basis of Asset Allocation
6.1.3 Asset Allocation Strategy
6.2 Evaluating Investment in various Stocks
6.2.1 Steps of Investing in Stocks
6.3 Various Loans and their Usage

6.3.1 Meaning of Loan
6.3.2 Types of Loans
6.4 Summary
6.5 Keywords
6.6 Review Questions
6.7 Further Readings

Objectives

After studying this unit, you will be able to:

Explain the issues and concepts related to overall financial planning process
Understand the goals and objectives of personal financial planning

Introduction

In today’s complex financial markets, you can select from an impressive array of investment
vehicles. Each investment also carries some risks, making it important to choose wisely if you
are selecting just one. The good news is that there’s no rule that says you must stick with only a
single type of investment. In fact, you can potentially lower your investment risk and help
increase your chances of meeting your investment goals by practicing “asset allocation.”
In the later part of the unit you will also learn about the sources of personal financing through
loans. Loans from banks are an important part of personal financial planning in a developing
country like India where majority of people have inadequate self finances to meet out their
requirements.

6.1 Asset Allocation

What does Asset Allocation Mean?
An investment strategy that aims to balance risk and reward by designing a portfolio’s assets
according to an individual’s goals, risk tolerance and investment horizon.

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