logical step is to identify the instruments but before you rush into a fixed deposit or mutual fund consider the asset class enter asset allocation the antidote to bingeingasset allocation is simply a strategy to apportion your money in a way that you can balance risk and return so you pick from various asset classes like equity debt real estate gold and cash and distribute your money to generate optimum returns by not being exposed to too much of any one class how much you hold in which type of investment matters more than the actual names stocks and funds you may have says uma shashikant chairperson the centre for investment education and learningthough asset allocation is a dynamic process unique to every person it can be decided by age goal horizons and your risk appetite the younger you are the more your ability to take risk since most goals are in the distant future so you can invest heavily in equity to ensure high returns and put a small percentage in debt for stability as you grow older or approach goals you will need to safeguard your capital so move to higher debt and lower equityalso read what should be your asset allocationeven if you get your asset allocation right you could go wrong by bingeing on the wrong instrument or through inefficient manner of investing this could result in lower returns because replication could lead to higher expenses or taxationequitymutual funds for ahmedabadbased nishit dalal its a double whammy at his age he should have about 60 of his portfolio in equity 20 in debt and about 20 in real estate however dalal has got his math wrong because he has discounted his investment in a second property which has skewed his portfolio towards real estate while he believes he is investing 80 in equity through mutual funds his equity share is actually only 20 with nearly 60 going to real estate and 10 to debtthe 41yearold has not only got his asset allocation wrong but also the manner of investing he is investing in equity through 25 mutual funds these are random picks on the advice of an agent who does everything for me including filling up forms says dalal explains vyakaranam bingeing can happen not only at the asset class level but also at the instrument level people think mutual fund is an asset class not an instrument by picking a lot of funds you are replicating the same stocks in pic nishit dalal 41 ahmedabadwhats too muchequity 25 mutual funds worth rs 199 lakhinsurance 6 traditional life insurance plans with a cover of rs 215 lakhwhat should he doequity prune mf portfolio to 67 schemes with equitydebt ratio of 6040 avoid sectoralthematic fundsinsurance surrender all 6 plans buy a term plan of rs 1 croreyou need a maximum of 810 funds says priya sunder director peakalpha investment services you can start with a 431 mix of equity debt and liquid funds and gradually increase the