Asset allocation is the strategic mix of growth assets (equity, real estate), stability assets (bonds, FDs), and liquidity (cash). It determines most portfolio volatility — stock selection is secondary for most retail investors.
Young investors with decade-long horizons can accept higher equity weights because drawdowns have time to recover. Near-term goals — school fee in three years — belong in debt even if equity headlines are euphoric.
Rebalancing yearly or when any sleeve drifts more than ~5 percentage points sells high and buys low mechanically, without needing market forecasts.
Tax locations matter: use PPF/EPF for fixed-income sleeves when rules fit, equity funds in taxable accounts if holding periods align with capital gains norms relevant to you.
Behavior trumps models: pick an allocation you will hold through one full market cycle without abandoning the plan.
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