Asset Allocation for Salary Workers: Build a Stable Portfolio

What is asset allocation?

Asset allocation means distributing money across different asset types to reduce risk and stabilize returns.

Why it matters

• Diversification lowers single‑asset risk
• Different assets perform in different market cycles
• A balanced portfolio is easier to hold long‑term

Core principles

1. Risk matches capacity (age, income stability, dependents)
2. Diversify across assets (cash, bonds, equities)
3. Rebalance regularly (every 6–12 months)

Simple allocation models

1) Age‑based rule

Equity % = 100 - age
Bond % = age

Adjust for personal risk tolerance.

2) Conservative / Balanced / Aggressive

• Conservative: 30% equity / 70% bonds & cash
• Balanced: 50% equity / 50% bonds & cash
• Aggressive: 70% equity / 30% bonds & cash

A salary‑worker friendly mix (example)

• Emergency cash: 20–30%
• Bonds or stable funds: 30–40%
• Index funds: 30–40%

Common mistakes

• Putting everything into one asset
• Chasing hype without a plan
• Never rebalancing

Quick checklist

• Define your risk profile
• Choose a simple model
• Automate monthly investments
• Rebalance once or twice a year

Disclaimer

This article is for general financial education and information only and does not constitute investment, insurance, tax, or legal advice. Please make decisions based on your situation and consult professionals if needed.