Learning Centre


Retirement Secure


Download Brochure

Retirement Brochure

Asset Allocation

Prudent asset allocation can help you meet your long-term financial and retirement goals.

Asset allocation can help you align your investments with your retirement goals and maintain a balanced portfolio as your financial goals and risk tolerance change over time. Careful asset allocation requires research, investment analysis and planning.

What is asset allocation?

Asset allocation is essentially an investment strategy to stabilize risks and returns by choosing investment instruments according to your financial goals, risk tolerance and time horizon. Asset classes have different levels of risk and return variability. Each asset class may perform differently over time. Successful asset allocation requires finding the proper mix of assets to balance reward with an acceptable level of risk.

Why is asset allocation critical for retirement planning?

Asset allocation is critical for long-term investing and retirement planning as it can help absorb the impact of market fluctuations and balance your tolerance for risk.

  • Absorb the impact of market fluctuations — Prudent asset allocation can help ride out the ups and downs of long-term market performance. No single asset class will outperform another consistently and no single asset allocation strategy may be right for everyone. Some investments may be up while others may be down, helping to minimize the overall potential impact of market decline and enable you to reach your retirement goals smoothly.
  • Balance your risk tolerance — High yield assets typically experience high volatility. These assets must be balanced by investments with lower rates of return to protect against large scale decline in value.

How do I go about my asset allocation?

Prudent asset allocation can help you balance your appetite for risk with your timeframes and retirement goals. This requires assessing, adjusting and tracking your investments regularly.

  • Assess your portfolio — Assess your portfolio allocation regularly to make sure it matches your risk tolerance, time horizon and retirement goals and needs.
  • Adjust your allocation — Adjust your allocation mix and re-align it to your retirement goals based on your risk tolerance and investment horizon.
  • Track your investments — Revisit your asset allocation regularly to make sure your investments are aligned with your retirement goals, since your investment timeframes and risk tolerance may change over time.

How often do I need to check my asset allocation?

A 3-6 monthly financial check-up to make sure your investments are aligned with your risk tolerance and long-term retirement goals is usually recommended. However, you need to review your portfolio when you anticipate a major life-event.

Frequently Asked Questions on asset allocation and retirement planning.

Asset Allocation Model

Once the Investor Profiling is arrived at, the next step is to create broad-based investment strategies to suit the investor risk tolerance score and his / her investment horizon. At Principal Retirement Advisors, we have developed a comprehensive yet simple asset allocation model. The asset allocation model is based on risk tolerance levels and asset class level constraints provided by Principal Retirement Advisors. The model combines the risk tolerance score of clients along with their investment horizon (e.g. years left to retirement) and also considers the impact of the investor’s economic environment on his investments.

Asset Allocation is done in two stages:

  • Strategic
  • Tactical
Strategic Asset Allocation

This is the base model for asset allocation and consists of five investment strategies that can help the client commence his accumulation program. The five strategies are Conservative, Moderate Conservative, Moderate, Moderate Aggressive and Aggressive and are derived from the client’s risk tolerance score as defined by Principal Retirement Advisors and investment horizon. Asset class level constraints are provided by Principal Retirement Advisors.

Tactical Asset Allocation.

Asset Allocation needs to respond to changes in the investor’s economic environment. Therefore, even though, the allocation does not change drastically because the client’s risk tolerance may not change, the asset allocation will have to be regularly “rebalanced”.

The Tactical Asset allocation Model will be a result of variations in underlying factors such as – inflation, IIP, money supply, growth as % of GDP, etc. The tactical asset allocation model is created on a quarterly basis.

Balance your portfolio, contact us now

A Principal Retirement Planner can offer a personalized retirement consultation with you, helping you clearly define your goals and develop a tailored retirement plan. With ongoing advice, guidance and customized recommendations, a PRP can help you address your short-and long-term financial needs.

Have a question? Write to us at inquiry@principalindia.com.


Retirement Planning

Advisory Services

Tools & Calculator

Learning Centre

Copyright © Principal Retirement Advisors Pvt. Ltd.

Home | Sitemap | Contact Us | Disclosures

Disclaimer | Terms of Use | Privacy & Security