Shiva Family- Prefect Example of Asset Allocation and Rebalancing

An example of perfect asset allocation – Shiva Family ReBalance Strategy example

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Shiva,s vehicle is Nandi ( the bull). His wife Parwati’s vehicle is Lion. Son Ganesh’s vehicle is Rat and Kartik’s vehicle is Peacock . More over there is a Snake with Lord Shiva also. What is the significance of all this with wealth Management.

If we consider each vehicle as a different asset class. We will observe that each animal is a different asset class in itself. Also one is the enemy of the other animal in normal life.  To explain the same we can see that the lion kills the Bull to fulfil the hunger. The snake kills the rat and the peacock kills the snake. Non of the animal is in harmony and are food for some one else. But very interestingly they live very happily at Kailash as a family of Lord Shiva.

If we assume some asset class like Equity as Lion, Debt as Bull, Real Estate as Peacock, Bullions as Rat, Currency,(or  Art and antiques) as Snake.

Each one is powerful and independent in its own way.

Another important aspect of the place Kailash is everything is snow covered here. Which signifies two things- one is that there is nothing to grow, no food etc at Kailash. And second is that there is no hunger and desire in anyone living here. And this is the reason all animals living here do not harm each other. Since there is no hunger and therefor no one disturbs anyone.

This whole place can be considered as a portfolio of wealth. The portfolio is like kailash where nothing is grown, one has to bring in the animals like the different asset class. If our portfolio is like any other place other than Kailash then each asset class will become its enemy. But if we can create a portfolio place is like kailash then there is no enemy and only harmony will persists.

Lion is aggressive like the equity as an asset class. The Bull is timid and slow comparatively like debt and is scared of the lion. At kailash the lion will never harm he bull. Outside Kailash if a lion see the bull it will just kill the same . Its only at Kailash they live together but controlled .

We need to ensure that our portfolio is like Kailash and all the asset class is managed here. We need to have all asset classes in our portfolio in full harmony. This will ensure full protection and perfect balance of the asset classes . If the lion is left without control it will kill the bull. If the equity is not controlled it will kill all the debt which was accumulated over a period of time. If its only debt then it will eat all the green around. In normal if someone is only investing in debt fund then the inflation will take over and all the greenery will be vanished. Rat can be killed by the snake and snake can be killed by the Peacock . Rat( Bullions) can be overshadowed by Peacock ( Real estate) and Real Estate returns can be over shadowed by Currency returns. Now one has to understand the harmony of the Land and ensure the peace of the place where all the asset classes live in harmony.

Keep rebalancing and asset allocation is the key. When done properly . there is a perfect harmony in a portfolio. We should have all the different asset classes in a portfolio. This will keep the balance of the portfolio and ensure proper growth. Invest in all asset classes in a proportion and one must not allow one asset class to over take other. This may create disproportion . Some time it is observed that people have 80% portfolio of real estate only . For some it is 80-90% Debt only. Which means all the investment is in FD, PPF, Post Office and Insurance only. This disproportion is not the way things should move.

Make a portfolio with all the asset classes and to do this one must take advice of a Volatility Coach or a financial Advisor to guide him or her in the journey of life.

#YoursTruly

@VolatilityCoach

Note- the image of Shiva Family is is taken from Google and the link details can be seen with the click of the picture.

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