Despite all the eulogies paid to women ('better halves,' for one), a vital activity like wealth creation continues to be a male bastion. Strangely, wealth creation is an activity which rarely features on a woman's 'To Do' list.

We believe this mindset needs to change, and change rapidly. Whether you are a working woman or a home-maker, whether you are a part of a family or a single woman, wealth creation is an activity you should be proactively pursuing.

Proper planning coupled with sound advice can ensure that wealth creation is well within everyone's reach. In this article, we will deal with asset allocation.

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Asset allocation, in simple words, is the process of building a portfolio of assets like equities, fixed income instruments, gold and property among others in line with your risk appetite to help you achieve your objectives.

Investing in various asset classes provides investors the benefits of diversification. As always, the asset allocation needs to be in line with the investor's risk appetite and her investment objective.

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Let us take an example to explain the same. Miss Puja is a 27-year-old single woman who has no immediate liabilities to provide for. With age on her side and a reasonably high appetite for taking on risk, equities and equity-related instruments could occupy a substantial portion of the portfolio.

On the other hand, we have Miss Jaya who is also 27 years of age, single and with no liabilities on hand; however the differentiating factor is the risk appetite i.e. she has a lower risk appetite.

In such a scenario, despite the seemingly similar profiles, Miss Jaya's asset allocation would be quite different from that of Miss Puja. Table 1 below shows possible asset allocations for both Miss Puja and Miss Jaya.

Miss Puja vs. Miss Jaya

Assets	Miss Puja	Miss Jaya
Equities/Equity based investments	45%	30%
Fixed income instruments	5%	10%
Gold	5%	5%
Property	40%	50%
Cash	5%	5%

As can be seen above, on account of Miss Jaya's relatively lower risk appetite, the equity component in her portfolio is far lower as compared to that of Miss Puja. Instead fixed income instruments occupy a larger chunk of the allocation.

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Readers would do well to note that the examples above are purely for an explanatory purpose. The investment advisor has a very significant role to play in aiding investors get the right asset allocation i.e. he should structure the portfolio based on the unique dynamics for each individual, further active monitoring is a key factor as well.

Another point to be noted is that the asset allocation undergoes change with passage of time as some of the objectives are achieved and new ones are set.

In our case, Miss Puja who was a risk-taker could a few years later (say, at the age of 50 years) have a reasonably different allocation. At that age she is married and has added responsibilities in terms of a family and children. The same in turn could translate into a need for less risky and more stable investments.

Miss Puja at 50 years of age

Assets	Miss Puja
Equities/Equity based investments	20%
Fixed income instruments	25%
Gold	5%
Property	40%
Cash	10%

As can be seen from table 2 above, the allocations in equities have been toned down and instead a higher portion is held in fixed income instruments and cash.

Now let's take a closer look at some of the areas where investors can invest their monies and try to understand the nuances involved therein as well.

1. Equities

Equities (or stocks) are often regarded as the best performing asset class vis-�-vis its peers over longer time frames (i.e. more than 3 years); also much has been written about how they are best equipped to counter inflation.

However equity-oriented investments are also capable of exposing investors to the highest degree of volatility and risk. Furthermore successful participation in the equities segment is no cakewalk.

There are a number of factors which affect the performance of equities and, studying and understanding all of them on an ongoing basis, is something most retail investors are incapable of doing.

Instead the mutual funds route is a far more convenient and feasible method to access the equity markets. Among others, mutual funds offer the benefits of diversification and expert services of a fund manager.

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The investment advisor has to perform an important role in helping investors select the right schemes, monitoring their performance and ensuring that investors make timely investment decisions.

Another option available to investors is ULIPs (Unit Linked Insurance Plans); ULIPs combine the benefits of insurance and investments in a single avenue. Unlike conventional insurance products (endowment plans), ULIPs offer investors to choice to decide the asset classes wherein their monies will be invested i.e. they can choose between various combinations equity-debt.

On a flipside, investors need to be well-informed of the charges levied on their investments. While initially charges tend to be high (a fact that unscrupulous agents do not disclose), over the life of the policy they tend to even out to reasonable levels.

2. Fixed income instruments

As the name suggests fixed income instruments (also referred to as assured return schemes) offer a high degree of certainty in the returns. The time of maturity and amount to be received on maturity are known in advance.

Bonds, debentures, fixed deposits, and small savings schemes (National Savings Certificate and Kisan Vikas Patra among others) are some of the variants. Insurance products like endowment plans which offer steady returns (albeit the exact returns may not be known upfront) can also find place in the portfolio.

While fixed income instruments pale on the returns parameter vis-�-vis their equity counterparts, they play a very important role by imparting much-needed stability to the portfolio.

Another feature worth mentioning is their relatively low risk profile; for investors with a low risk appetite, fixed income instruments should form the mainstay of the portfolio. Fixed income instruments have been dealt with in detail in the article "Get a fix on your assured return schemes".

3. Gold

Gold as an asset class has always been a vital commodity for most Indian households. However gold purchases have not necessarily been made from an 'investment perspective;' instead it has found place in the form of ornaments for purposes like usage and religious factors.

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There is a need for investors to look beyond these 'emotional reasons' and evaluate gold from the investment perspective.

The price of gold is driven by factors which are broadly speaking different from those that drive the price of other assets such as equities. This results in what is generally seen as a contrarian trend and makes gold a good bet from the diversification perspective.

However in the Indian context over the long-term, the performance of gold as an asset class is unlikely to be superior as compared to other asset classes like equities; this should be factored in while adding gold to one's portfolio.

4. Property

Provisions for holdings in real estate/property should ideally be made at an early stage in one's lifetime; this is necessary on account of the high costs involved and also the importance of the investment. Once you have a family, the daily expenses tend to rise for the first few years as you settle down. That does not leave much scope for investing.

Though the returns from property are only notional, it is good to have the security and comfort of owning one's own home. Real estate funds have recently been launched in India.

Despite the fact that they are presently available only to institutional investors and high net worth individuals (HNIs); the same can emerge as a means to invest in the property segment for retail investors in the future.

5. Cash

Investors must hold a sufficient amount of their assets in cash i.e. in liquid form; this will help them tide over unplanned expenditures and other contingencies. Also one must remember that equity-oriented investments are made with a long-term perspective and liquidating them to meet any contingency may prove to be a loss-making proposition depending on the market conditions.

On the other hand avenues like property and fixed income instruments tend to be intrinsically illiquid. Holdings in cash include amounts held in savings bank accounts, liquid funds and short-term fixed deposits.

To know how parents should go about securing their children's future and the role women can play in the same, download your free copy of the Money Simplified.