For individual investors, it may be difficult to invest in alternative assets with high risks and high expected returns, but there are actually quite a few asset categories available for allocation, and it is not difficult for ordinary investors to diversify their assets.
Selecting assets with low correlation for allocation can, to a certain extent, resist the risk of large fluctuations in a single variety and obtain long-term stable returns. Ordinary investors can start with the following aspects in asset allocation:
Education and Self-improvement
The world of investment is full of complexity and changes, so ordinary investors should continue to learn and accumulate relevant knowledge. You can learn the basics of investment and market analysis skills by reading classic investment books, attending investment seminars or online courses. Only by fully understanding investment products and market rules can you make wise investment decisions.
Strategic allocation
According to your own risk tolerance, make overall planning and arrangements for your assets, and achieve a relatively certain absolute return target and risk level from a medium- and long-term perspective based on the risk-return characteristics of various assets.
In terms of top-level investment strategies, we recommend diversified allocation. Considering the volatility of the stock market, we can include major asset classes such as bonds, gold, and commodities. You can choose ordinary funds, or consider allocating products such as REITs to reduce the risk of the overall portfolio and increase the investment success rate through a combination of major asset classes.
The specific proportion of asset allocation varies from person to person. For example, investors who pursue long-term higher expected returns can consider increasing the proportion of equity assets; while investors who pursue a stable experience can, based on international experience, allocate part of their funds (for example, 1/3) to the investment portfolio.
Diversified investment portfolio
In addition to determining the proportion of major asset classes, we also need to go deep into the assets, consider factors such as investment style, investment sector, and investment region, and make more refined structural matching.
Diversified investment is not just about increasing the number of products, but about enhancing the diversity of assets. For example, we can expand the investment scope from the A-share market to the global market, including Hong Kong stocks, US stocks and other products, to achieve the goal of global asset allocation.
In terms of equity assets, we can simultaneously configure products of different styles such as defensive, technology growth, and relatively stable to achieve a balanced allocation strategy with both offense and defense. In addition, we can also configure large-cap and small-cap style funds with differentiated market performance to achieve the purpose of risk diversification.
Formulate clear investment goals and strategies
In terms of specific target selection, we can either configure different styles through passive index funds, or choose excellent managers and products to obtain excess returns. The selection of active equity funds requires understanding of investment strategies, style stability, performance sustainability, etc, and choosing funds that match your own style, holding firmly, and tracking regularly.
Liquidity management
Investors often tend to focus on returns and risks and ignore liquidity management. Therefore, they should take into account both medium- and long-term investment goals and periodic liquidity needs, plan the use and duration of funds for themselves, and face the investment process calmly.
Use technology tools to optimize investment
Modern technology provides investors with many convenient tools and platforms, such as investment applications, online trading platforms, and portfolio management software. These tools can help investors monitor market dynamics in real time, conduct investment analysis, and manage portfolios, so as to make investment decisions more effectively.
Risk management and investment mentality
Finally, pay attention to risk management and a good investment mentality. Don't be greedy for high returns and ignore risk control. Establishing a stop-loss strategy, diversifying risks, and avoiding emotional trading decisions are the keys to maintaining a sound investment mentality.