Question

Describe the financial concept that stuck out to you the most. What in particular about this concept sticks out? Can you use this concept with your personal finances. If so, how? If not, how do you think you will use the concept?

Answer 1

Financial concept that stuck out the most is asset allocation and diversification in order to eliminate the and systematic risk associated with the portfolio and maximize the overall rate of return and minimise the overall risk in order to maintain an optimal portfolio.

Financial concept that has helped me the most is consistently diversifying asset portfolio into different asset classes in order to provide my portfolio with the diversification benefit and minimise the risk which are associated with firm specific risk in order to gain a leverage to maximize the rate of return and these type of portfolios are like all weather portfolios in which they can be maintained because the exposure is not just related to stocks but they are exposed to Bond also.

The best thing about this diversification is that, they will be helping in elimination of unsystematic risk and they will be helping in survive through different market cycles

Yes, I am using this concept with my personal finance in order to maximize my rate of return by allocating my assets to equities and bonds and gold also, so I can be exploring myself in times of financial downturn that my portfolio will be surviving. This has helped me to gain an additional benefit of adding more at the the lower end of the market to the optimum asset class in order to maximise my return.