Ray Dalio refers to asset allocation as the holy grail of investing. Asset allocation is basically how you invest your money. The idea is to have a well diversified portfolio which gives you the highest possible return for the least amount of risk. My asset allocation is pretty conservative and is heavily weighted towards low risk assets like land, buildings, and long term pension funds.
Retirement funds take up 31.9% of my portfolio. These are long term assets like the statutory NSSF and other employer sponsored plans. Buildings take up 24.0% of the asset portfolio. Land comprises 14.2%. These are a bunch of scattered plots around town. Business assets take up 11.6%. These are high risk assets with a potential for great returns in the future. We have some long term agri-business assets which take up 7.1%. Government Treasury bills make up 5.4%. Unit trusts 2.3%. Insurance assets are 1.8%. Cash makes up 1.5% and shares are only 0.1%. My asset portfolio is totally debt free and is not encumbered. The annual return on my assets is about 10% to 12% per year which is not so bad for a conservative portfolio. My asset net-worth has grown at a rate of about 29% per year for the last two years since I became more intentional with my finances. This was driven mainly by debt elimination and investment in short term financial assets.
So this is how I invest my money. How do you invest yours? Leave a comment.
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