Asset Allocation

I was having a casual conversation with a friend of mine..on asset allocation. Seemedshe was having a problem of plenty.

We started with the usual, take land..seemed she had one already.
I suggested build a flat/guesthouse on that..which was rejected.
Next suggestion was take a farm house, which she already had.
And so on the conversation went.

How does one allocate ones money/savings in different instruments.
And in these days there are plenty of avenues to make the investments. More so now withthe globalisation/world is flat syndrome, you have global options to invest.
A person sitting in India may well want to invest in a property in Dubai.
Me being a proponent of the stocks/share market, would always suggest to invest in the markets as well

The rule of thumb I have come across is 100 MINUS your age, is the %age one should allocate in equity. The logic being the younger you are more is the capacity to take risks. I am myself not sure how and why this rule has been there.. But maybe this logic/rule can be used as a guiding principle while investing.

The rest can be invested in fixed deposits, provident funds, house etc.

Asset allocation is as much important as saving is. Instead of wealth creation, a wrong asset allocation may erode your principal in the current inflation .

My personal picks for asset allocation would be :
If one has a steady stream of income, set aside a portion for investment in shares regularly. One may not invest in shares per the above rule directly. For this one needs to have confidence in the markets, after all its ones hard earned money.

Set aside some money in fixed deposits. Having some investment in risk free FD is always a good option.

Gradually plan to invest in some property as well. There is no denying in current times, it is a must to have some property.