Equity – Ascent Financial Solutions

Strategic Asset Allocation & Rebalancing: Back bone of your Portfolio-Part-2.

Prakash Lohana — Sat, 28 Feb 2015 09:13:39 +0000

In may last article on Asset Allocation, I had discussed how Asset Allocation and Rebalancing of portfolio is done at periodic frequency.Now in this article I have given a back testing of the same for a period of 31/12/2006 to 31/12/2014. Let us see below, how Asset allocation and rebalancing actually works and help investors to reduce risk in their portfolio and make reasonable returns.

In below calculation I have taken an investment of Rs. 1 lac and divided it in 50% to Sensex (Equity) and 50% to Franklin India Short Term Bond Fund ( Debt) and thereafter rebalanced on a half yearly basis. Figures of the Sensex and NAV of Fund are real.

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Asset Allocation: Backbone of your Portfolio.

Prakash Lohana — Sat, 14 Feb 2015 05:34:29 +0000

In my earlier article on Risk profiling I had explained about what is Risk Profiling and how to do it? Now this article is an Effort to explain what is Asset Allocation and how it helps you.

Asset Allocation is the process of dividing your investments among different assets classes , such as Equity, bonds, real estate, commodities and cash, to optimize the risk/reward trade off based on an individual investor’s specific situation and goals. Normally in India investor’s directly start investing in securities without deciding what is optimum asset mix for them.

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What is Equity? Why Share Prices move up & down?

Prakash Lohana — Thu, 10 Jul 2014 07:37:48 +0000

Before you start reading this article I would insist you to make sure that you read this entire article thoroughly. Because this article can help you to change your investing behavior and this can have a major positive impact on your financial life.

During 10 years of my career as a financial planner, I have met thousands of investors and tried to ask almost every investor this question to check their understanding on equity , unfortunately most of them have invested in equity either directly or through mutual funds but have no clarity about what is equity? And how it works? Investors have basic understanding of real estate, gold and debt but they are very poor in understanding equity and also suffer with lot of myths about equity. Through this article I have tried explain with clarity what equity is? and How it works?

What is Equity?

Equity is an instrument of ownership. It is ownership in a business, which is quantified through shares. Let me give you a simple example to understand Equity. Suppose you want to start a business which requires a capital investment of Rs. 1 crore. Now you don’t have 1 crore, so you have two options either you can borrow from bank or you can ask others to invest in your business and become your partner. Now I find the proposal lucrative and by investing Rs 50 lakhs I become 50% partner in your business. This is simple format of partnership but suppose if you required Rs. 100 crores of investment or even more than that. In that case you can create a ltd. Company and bring open offer to become partner (owner) and this offer is quantified in shares. Let me simplify with small figures for better understanding through the following table and example.

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