Continuation from the Asset Growth Topic!

Hi!

Before i forget, i better finish off with the write up on " Asset Growth Chart" topic (2 articles before this)!

If you can remember the previous article ( 2 articles before this), the investment products i cited as an example, produces an expected rate of return ( hereby known as ExpR) of 4.27% per annum. Please see the following table 1.0. Some of you readers might find the table unreadable. Plese right click your mouse and click again on "OPEN LINK IN NEW WINDOW". You will now have a pop up window that displays this same table 1.0, clearer!

The table shows the same asset classes of investment products cited in my earlier article (2 articles before this). Given the same asset asset allocation that sums up to RM 175000, this portfolio of investment only generates an ExpR of 4.27%, as mentioned earlier.

Now, you have only RM 175000 (just an example) in your portfolio that generates ExpR 4.27%, how do you increase your return more? Assuming you don't plough in anymore cash from external source, with RM 175000, can you increase your ExpR more? Sure can!!

Here's how. You need to play around with the asset allocation in that portfolio. Table 1.1 below shows the same portfolio but somehow modified! Please see the allocation (modified) in the asset classes. Move RM 50000 from EPF and park it in Unit Trust asset class. See for yourself, how the ExpR now have changed to 4.98%. (Right click mouse and see it in a new window)

Simply, by moving a quantum of money from one asset class to another asset class in a same portfolio will definitely influence the ExpR (Expected Return) of the overall portfolio. THIS STRATEGY IS CALLED ASSET ALLOCATION STRATEGY! Have you checked your investment portfolio lately? If so, try this concept in your own and move around or modify your allocation to optimise the return. Remember, the example portfolio shown in this article is purely recreational. Assets have beed diversified into FIXED INCOME( Fixed Deposit and Saving) and MANAGED FUND (Unit Trust and EPF). You can opt for other assets to diversify your investment. Diversification and Asset Allocation are 2 important strategies used to optimise return.

Before we unplug this session, please see the table 1.2 below. Some modification have been executed on the allocation among the diversified assets. Can you see the surge in the ExpR now?

The ExpR now = 5.41%

Happy reading!!