asset allocation
Asset allocation is how you divide your money between different types of investment, and it decides most of your result.
In plain English
Almost everybody spends their energy on the wrong question. Which share. Which fund. When to buy.
The research is uncomfortably clear that almost none of that matters compared with one decision. How much of your money is in shares, how much in bonds and treasury bills, how much in property, and how much held in dollars rather than naira.
That mix is your asset allocation, and it explains the overwhelming majority of what will happen to your money over decades.
It should follow two honest answers. When do you need this money? Time forgives volatility, and its absence forgives nothing. And what can you actually endure? The perfect allocation you abandon in a bad year is worse than the imperfect one you keep.
A young Nigerian with thirty years ahead can hold mostly growth assets and treat every crash as a sale. Someone needing the money in two years cannot, and should not pretend otherwise because a rising market made them feel brave.
Get the mix right and the individual choices barely matter. Get the mix wrong and no amount of brilliant stock picking will save you.
Two people invest ₦10 million. One holds 90 percent in shares, the other 30 percent in shares and the rest in treasury bills and a dollar fund. Over twenty years their outcomes differ enormously, and neither of them ever picked a single share themselves.
Questions people ask
What mix should I have?
It depends entirely on your time horizon and your temperament. Longer time and stronger nerves allow more growth assets. There is no universal answer, only an honest one.
Should Nigerians hold dollar assets?
Many do, as a hedge against naira weakness. It is a reasonable part of a mix rather than the whole of one.
How often should I change it?
Rarely. Rebalance once a year to bring it back to your intended mix, and change the mix itself only when your life changes, not when the market does.
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