{"id":1637,"date":"2021-09-03T12:53:33","date_gmt":"2021-09-03T04:53:33","guid":{"rendered":"http:\/\/blog.imoney.my\/?p=1637"},"modified":"2021-09-03T19:32:39","modified_gmt":"2021-09-03T11:32:39","slug":"what-is-asset-allocation-why-is-it-important","status":"publish","type":"post","link":"https:\/\/www.imoney.my\/articles\/what-is-asset-allocation-why-is-it-important","title":{"rendered":"What Is Asset Allocation? Why Is it Important?"},"content":{"rendered":"<p>Having a proper asset allocation is by far the most important part of any investment portfolio. Research has shown that good asset allocation is key to the long term success of any investment portfolio.<\/p>\n<h2><span class=\"ez-toc-section\" id=\"What-is-asset-allocation\"><\/span>What is asset allocation?<span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p>Essentially, asset allocation is how you divide your investments between the different asset classes (e.g. cash, bond, property and share). An older investor may have a lower allocation to more risky assets like shares, while a younger investor may prefer a higher allocation to such assets.<\/p>\n<h3><span class=\"ez-toc-section\" id=\"Why-is-it-important\"><\/span>Why is it important?<span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p>Since different asset classes react differently to changing market and economic conditions, having an appropriate asset allocation can help you manage the ups and downs of financial markets.<\/p>\n<p>For example, an investment portfolio (e.g. Portfolio A) with a larger allocation to cash (e.g. 80%) than shares (e.g. 20%) will perform much better in bad market conditions compared to a portfolio with higher shares allocation. The same Portfolio A would however underperform a portfolio with 100% shares during a \u201cbull run\u201d (or good share market conditions).<\/p>\n<h3><span class=\"ez-toc-section\" id=\"How-to-determine-the-right-asset-allocation-for-you\"><\/span>How to determine the right asset allocation for you?<span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p>There is no right or wrong answer to this question, as the appropriate asset allocation for you depend on a number of things, including:<\/p>\n<ul>\n<li>Your attitude toward risks \/ uncertainty \u2013 how much short-term losses can you handle?<\/li>\n<li>Your investment time horizon \u2013 how long can you put away your money for?<\/li>\n<li>Your individual circumstances \u2013 how much future financial commitments do you have?<\/li>\n<\/ul>\n<p>As a rule of thumb, the lower your tolerance toward risks and the shorter your investment time horizon, the smaller your allocation should be in risky assets such as shares and property.<\/p>\n<h3><span class=\"ez-toc-section\" id=\"How-does-age-come-into-play\"><\/span>How does age come into play?<span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p>As you grow older, it is important that your asset allocation adjusts to reflect the change in circumstances. If you continue to invest like how you were 10 or 15 years earlier, you may be undertaking undue amount of risk.<\/p>\n<p>Generally, your asset allocation should gradually change towards a more conservative one as you age, with more allocation in safer assets (like bonds and cash), and less in risky assets (like shares). As you reach retirement age, it is important to have enough income generating assets in your portfolio (e.g. cash, bonds and property) to replace the loss of income.<\/p>\n<h3><span class=\"ez-toc-section\" id=\"Some-example-investment-portfolios\"><\/span>Some example investment portfolios<span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p style=\"text-align: center;\"><a href=\"\/articles\/wp-content\/uploads\/2012\/10\/Examples-Of-Asset-Allocation.png\"><img loading=\"lazy\" decoding=\"async\" width=\"595\" height=\"264\" class=\"aligncenter wp-image-1638\" title=\"Examples Of Asset Allocation\" src=\"\/articles\/wp-content\/uploads\/2012\/10\/Examples-Of-Asset-Allocation.png\" alt=\"\" srcset=\"\/articles\/wp-content\/uploads\/2012\/10\/Examples-Of-Asset-Allocation.png 595w, \/articles\/wp-content\/uploads\/2012\/10\/Examples-Of-Asset-Allocation-300x133.png 300w\" sizes=\"(max-width: 595px) 100vw, 595px\" \/><\/a><\/p>\n<p>&nbsp;<\/p>\n<p>Still hesitating which investment for is the best for you? Compare and find the <a href=\"https:\/\/www.imoney.my\/\" target=\"_blank\" rel=\"noopener noreferrer\">best investments options<\/a> that suit you with iMoney!<\/p>\n<p><em>This article was first published in 2012 and has been updated for freshness, accuracy and comprehensiveness.<\/em><\/p>\n","protected":false},"excerpt":{"rendered":"<p>If you are an investor, you need to know the right asset allocation for you.<\/p>\n","protected":false},"author":1,"featured_media":49425,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[1],"tags":[],"class_list":["post-1637","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-investment"],"acf":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v23.5 - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>What Is Asset Allocation? Why Is it Important If You Are An Investor?<\/title>\n<meta name=\"description\" content=\"Proper asset allocation is an important part of any investment portfolio. Find out what is the right asset allocation for you, and why it is important.\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.imoney.my\/articles\/what-is-asset-allocation-why-is-it-important\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"What Is Asset Allocation? Why Is it Important If You Are An Investor?\" \/>\n<meta property=\"og:description\" content=\"Proper asset allocation is an important part of any investment portfolio. Find out what is the right asset allocation for you, and why it is important.\" \/>\n<meta property=\"og:url\" content=\"https:\/\/www.imoney.my\/articles\/what-is-asset-allocation-why-is-it-important\" \/>\n<meta property=\"og:site_name\" content=\"iMoney Malaysia\" \/>\n<meta property=\"article:published_time\" content=\"2021-09-03T04:53:33+00:00\" \/>\n<meta property=\"article:modified_time\" content=\"2021-09-03T11:32:39+00:00\" \/>\n<meta property=\"og:image\" content=\"https:\/\/static.imoney.my\/articles\/wp-content\/uploads\/2018\/11\/03192154\/asset-allocation_FB.jpg\" \/>\n\t<meta property=\"og:image:width\" content=\"1200\" \/>\n\t<meta property=\"og:image:height\" content=\"629\" \/>\n\t<meta property=\"og:image:type\" content=\"image\/jpeg\" \/>\n<meta name=\"author\" content=\"iMoney Editorial\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:label1\" content=\"Written by\" \/>\n\t<meta name=\"twitter:data1\" content=\"iMoney Editorial\" \/>\n\t<meta name=\"twitter:label2\" content=\"Est. reading time\" \/>\n\t<meta name=\"twitter:data2\" content=\"2 minutes\" \/>\n<script type=\"application\/ld+json\" class=\"yoast-schema-graph\">{\"@context\":\"https:\/\/schema.org\",\"@graph\":[{\"@type\":\"WebPage\",\"@id\":\"https:\/\/www.imoney.my\/articles\/what-is-asset-allocation-why-is-it-important\",\"url\":\"https:\/\/www.imoney.my\/articles\/what-is-asset-allocation-why-is-it-important\",\"name\":\"What Is Asset Allocation? Why Is it Important If You Are An Investor?\",\"isPartOf\":{\"@id\":\"https:\/\/www.imoney.my\/articles\/#website\"},\"primaryImageOfPage\":{\"@id\":\"https:\/\/www.imoney.my\/articles\/what-is-asset-allocation-why-is-it-important#primaryimage\"},\"image\":{\"@id\":\"https:\/\/www.imoney.my\/articles\/what-is-asset-allocation-why-is-it-important#primaryimage\"},\"thumbnailUrl\":\"https:\/\/static.imoney.my\/articles\/wp-content\/uploads\/2018\/11\/03192116\/asset-allocation_main.jpg\",\"datePublished\":\"2021-09-03T04:53:33+00:00\",\"dateModified\":\"2021-09-03T11:32:39+00:00\",\"author\":{\"@id\":\"https:\/\/www.imoney.my\/articles\/#\/schema\/person\/2dc429bac9840e75ad08ab242c57dcbb\"},\"description\":\"Proper asset allocation is an important part of any investment portfolio. Find out what is the right asset allocation for you, and why it is important.\",\"breadcrumb\":{\"@id\":\"https:\/\/www.imoney.my\/articles\/what-is-asset-allocation-why-is-it-important#breadcrumb\"},\"inLanguage\":\"en-US\",\"potentialAction\":[{\"@type\":\"ReadAction\",\"target\":[\"https:\/\/www.imoney.my\/articles\/what-is-asset-allocation-why-is-it-important\"]}]},{\"@type\":\"ImageObject\",\"inLanguage\":\"en-US\",\"@id\":\"https:\/\/www.imoney.my\/articles\/what-is-asset-allocation-why-is-it-important#primaryimage\",\"url\":\"https:\/\/static.imoney.my\/articles\/wp-content\/uploads\/2018\/11\/03192116\/asset-allocation_main.jpg\",\"contentUrl\":\"https:\/\/static.imoney.my\/articles\/wp-content\/uploads\/2018\/11\/03192116\/asset-allocation_main.jpg\",\"width\":1200,\"height\":628,\"caption\":\"Know your asset allocation\"},{\"@type\":\"BreadcrumbList\",\"@id\":\"https:\/\/www.imoney.my\/articles\/what-is-asset-allocation-why-is-it-important#breadcrumb\",\"itemListElement\":[{\"@type\":\"ListItem\",\"position\":1,\"name\":\"Home\",\"item\":\"https:\/\/www.imoney.my\/articles\/\"},{\"@type\":\"ListItem\",\"position\":2,\"name\":\"Investment\",\"item\":\"https:\/\/www.imoney.my\/articles\/category\/investment\"},{\"@type\":\"ListItem\",\"position\":3,\"name\":\"What Is Asset Allocation? Why Is it Important?\"}]},{\"@type\":\"WebSite\",\"@id\":\"https:\/\/www.imoney.my\/articles\/#website\",\"url\":\"https:\/\/www.imoney.my\/articles\/\",\"name\":\"iMoney Malaysia\",\"description\":\"Everything you need to know about improving your personal finances.\",\"potentialAction\":[{\"@type\":\"SearchAction\",\"target\":{\"@type\":\"EntryPoint\",\"urlTemplate\":\"https:\/\/www.imoney.my\/articles\/?s={search_term_string}\"},\"query-input\":{\"@type\":\"PropertyValueSpecification\",\"valueRequired\":true,\"valueName\":\"search_term_string\"}}],\"inLanguage\":\"en-US\"},{\"@type\":\"Person\",\"@id\":\"https:\/\/www.imoney.my\/articles\/#\/schema\/person\/2dc429bac9840e75ad08ab242c57dcbb\",\"name\":\"iMoney Editorial\",\"image\":{\"@type\":\"ImageObject\",\"inLanguage\":\"en-US\",\"@id\":\"https:\/\/www.imoney.my\/articles\/#\/schema\/person\/image\/\",\"url\":\"https:\/\/secure.gravatar.com\/avatar\/4268d61be86ba47b656e314b503a5c2f?s=96&d=mm&r=g\",\"contentUrl\":\"https:\/\/secure.gravatar.com\/avatar\/4268d61be86ba47b656e314b503a5c2f?s=96&d=mm&r=g\",\"caption\":\"iMoney Editorial\"},\"description\":\"iMoney Editorial Team is composed of 4 writers with wide-ranging interests and areas of expertise. Their primary responsibility is to write financial-related articles to share and educate Malaysians on how to save, make and grow their money.\",\"sameAs\":[\"http:\/\/www.imoney.my\"],\"url\":\"https:\/\/www.imoney.my\/articles\/author\/chinglee\"}]}<\/script>\n<!-- \/ Yoast SEO plugin. -->","yoast_head_json":{"title":"What Is Asset Allocation? Why Is it Important If You Are An Investor?","description":"Proper asset allocation is an important part of any investment portfolio. Find out what is the right asset allocation for you, and why it is important.","robots":{"index":"index","follow":"follow","max-snippet":"max-snippet:-1","max-image-preview":"max-image-preview:large","max-video-preview":"max-video-preview:-1"},"canonical":"https:\/\/www.imoney.my\/articles\/what-is-asset-allocation-why-is-it-important","og_locale":"en_US","og_type":"article","og_title":"What Is Asset Allocation? Why Is it Important If You Are An Investor?","og_description":"Proper asset allocation is an important part of any investment portfolio. Find out what is the right asset allocation for you, and why it is important.","og_url":"https:\/\/www.imoney.my\/articles\/what-is-asset-allocation-why-is-it-important","og_site_name":"iMoney Malaysia","article_published_time":"2021-09-03T04:53:33+00:00","article_modified_time":"2021-09-03T11:32:39+00:00","og_image":[{"width":1200,"height":629,"url":"https:\/\/static.imoney.my\/articles\/wp-content\/uploads\/2018\/11\/03192154\/asset-allocation_FB.jpg","type":"image\/jpeg"}],"author":"iMoney Editorial","twitter_card":"summary_large_image","twitter_misc":{"Written by":"iMoney Editorial","Est. reading time":"2 minutes"},"schema":{"@context":"https:\/\/schema.org","@graph":[{"@type":"WebPage","@id":"https:\/\/www.imoney.my\/articles\/what-is-asset-allocation-why-is-it-important","url":"https:\/\/www.imoney.my\/articles\/what-is-asset-allocation-why-is-it-important","name":"What Is Asset Allocation? Why Is it Important If You Are An Investor?","isPartOf":{"@id":"https:\/\/www.imoney.my\/articles\/#website"},"primaryImageOfPage":{"@id":"https:\/\/www.imoney.my\/articles\/what-is-asset-allocation-why-is-it-important#primaryimage"},"image":{"@id":"https:\/\/www.imoney.my\/articles\/what-is-asset-allocation-why-is-it-important#primaryimage"},"thumbnailUrl":"https:\/\/static.imoney.my\/articles\/wp-content\/uploads\/2018\/11\/03192116\/asset-allocation_main.jpg","datePublished":"2021-09-03T04:53:33+00:00","dateModified":"2021-09-03T11:32:39+00:00","author":{"@id":"https:\/\/www.imoney.my\/articles\/#\/schema\/person\/2dc429bac9840e75ad08ab242c57dcbb"},"description":"Proper asset allocation is an important part of any investment portfolio. Find out what is the right asset allocation for you, and why it is important.","breadcrumb":{"@id":"https:\/\/www.imoney.my\/articles\/what-is-asset-allocation-why-is-it-important#breadcrumb"},"inLanguage":"en-US","potentialAction":[{"@type":"ReadAction","target":["https:\/\/www.imoney.my\/articles\/what-is-asset-allocation-why-is-it-important"]}]},{"@type":"ImageObject","inLanguage":"en-US","@id":"https:\/\/www.imoney.my\/articles\/what-is-asset-allocation-why-is-it-important#primaryimage","url":"https:\/\/static.imoney.my\/articles\/wp-content\/uploads\/2018\/11\/03192116\/asset-allocation_main.jpg","contentUrl":"https:\/\/static.imoney.my\/articles\/wp-content\/uploads\/2018\/11\/03192116\/asset-allocation_main.jpg","width":1200,"height":628,"caption":"Know your asset allocation"},{"@type":"BreadcrumbList","@id":"https:\/\/www.imoney.my\/articles\/what-is-asset-allocation-why-is-it-important#breadcrumb","itemListElement":[{"@type":"ListItem","position":1,"name":"Home","item":"https:\/\/www.imoney.my\/articles\/"},{"@type":"ListItem","position":2,"name":"Investment","item":"https:\/\/www.imoney.my\/articles\/category\/investment"},{"@type":"ListItem","position":3,"name":"What Is Asset Allocation? Why Is it Important?"}]},{"@type":"WebSite","@id":"https:\/\/www.imoney.my\/articles\/#website","url":"https:\/\/www.imoney.my\/articles\/","name":"iMoney Malaysia","description":"Everything you need to know about improving your personal finances.","potentialAction":[{"@type":"SearchAction","target":{"@type":"EntryPoint","urlTemplate":"https:\/\/www.imoney.my\/articles\/?s={search_term_string}"},"query-input":{"@type":"PropertyValueSpecification","valueRequired":true,"valueName":"search_term_string"}}],"inLanguage":"en-US"},{"@type":"Person","@id":"https:\/\/www.imoney.my\/articles\/#\/schema\/person\/2dc429bac9840e75ad08ab242c57dcbb","name":"iMoney Editorial","image":{"@type":"ImageObject","inLanguage":"en-US","@id":"https:\/\/www.imoney.my\/articles\/#\/schema\/person\/image\/","url":"https:\/\/secure.gravatar.com\/avatar\/4268d61be86ba47b656e314b503a5c2f?s=96&d=mm&r=g","contentUrl":"https:\/\/secure.gravatar.com\/avatar\/4268d61be86ba47b656e314b503a5c2f?s=96&d=mm&r=g","caption":"iMoney Editorial"},"description":"iMoney Editorial Team is composed of 4 writers with wide-ranging interests and areas of expertise. Their primary responsibility is to write financial-related articles to share and educate Malaysians on how to save, make and grow their money.","sameAs":["http:\/\/www.imoney.my"],"url":"https:\/\/www.imoney.my\/articles\/author\/chinglee"}]}},"_links":{"self":[{"href":"https:\/\/www.imoney.my\/articles\/wp-json\/wp\/v2\/posts\/1637"}],"collection":[{"href":"https:\/\/www.imoney.my\/articles\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.imoney.my\/articles\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.imoney.my\/articles\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.imoney.my\/articles\/wp-json\/wp\/v2\/comments?post=1637"}],"version-history":[{"count":18,"href":"https:\/\/www.imoney.my\/articles\/wp-json\/wp\/v2\/posts\/1637\/revisions"}],"predecessor-version":[{"id":49429,"href":"https:\/\/www.imoney.my\/articles\/wp-json\/wp\/v2\/posts\/1637\/revisions\/49429"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.imoney.my\/articles\/wp-json\/wp\/v2\/media\/49425"}],"wp:attachment":[{"href":"https:\/\/www.imoney.my\/articles\/wp-json\/wp\/v2\/media?parent=1637"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.imoney.my\/articles\/wp-json\/wp\/v2\/categories?post=1637"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.imoney.my\/articles\/wp-json\/wp\/v2\/tags?post=1637"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}