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- Asset Allocation Right Mix Part 1 For Smart Starter
Asset Allocation – Do you have the right mix? (Part 1 - Smart Starter)
1. What does 'asset allocation' mean in personal finance?
Correct option B - Asset allocation is the strategy of dividing your investments among asset classes like equity, debt, gold, or real estate based on your goals, age, and risk tolerance.
2. What is the biggest advantage of good asset allocation?
Correct option C - Asset allocation means deciding how much of your money should go into different asset classes like equity, debt, gold, etc. It’s about finding the right balance for your goals, age, and risk appetite that fits your personal situation.
3. What is diversification in investing?
Correct option B - Diversification is about not putting all your eggs in one basket. Even within one asset class (like equity), you can spread investments across different sectors or companies to reduce risk if one area performs poorly.
4. What is rebalancing in asset allocation?
Correct option B - Over time, your asset allocation can drift. Rebalancing helps bring it back in line with your goals and risk tolerance.
5. How does asset allocation help during market ups and downs?
Correct option C - During market volatility, well-allocated portfolios are less likely to see extreme swings because all assets don’t perform in same way in different market cycles.
6. Why is your teens to early 20s a good time to invest more in equity?
Correct option A - When you're young, you have time on your side. This means you can ride out market volatility and let compounding work for you over the long term. Equity can be risky in the short run, but it has the potential to generate higher returns if you're patient. Starting early with a higher equity allocation gives your money the time it needs to grow meaningfully.
7. What should you avoid doing with your salary if you want to start investing wisely?
Correct option A - “Income – Savings = Expenses” is the smarter formula. Save first, then spend on what is necessary.
8. If you're saving for something 5 years away, like a master’s degree, which asset mix works best?
Correct option B - For mid-term goals, a balanced mix helps grow your money while limiting risk.
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90% Score
7 answers out of 8 questions attempted correctly.
Summary
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This content is intended solely for informational purposes. The views expressed in this content are personal. Axis Bank and/or the author shall not be liable for any direct or indirect loss or liability incurred by the reader arising from reliance on the content herein. Readers are advised to consult a qualified financial advisor before making any financial decisions. Axis Bank does not endorse or guarantee the accuracy of any third-party content or links included in this content.
