Asset Allocation
With the accumulation of wealth and the increase in financial awareness, many investors know that they cannot put their eggs in one basket. The current allocation of U.S. dollar assets is mainly based on the following considerations.
- One of the main reasons to diversify your risk allocation to U.S. dollar assets is to diversify risk. We often say "don't put your eggs in one basket", and the word "allocation" emphasizes the combination and proportion of assets. Rather than betting on a particular region or country, it is placed in different "baskets" to effectively hedge against the volatility risk that occurs in a single market.
- The security of assets is well established in the U.S. market system. Privacy protection, private property protection, regulatory structure, regulatory system are all very mature and sound. This is exactly what Chinese HNW families need most.
- Diversifying exchange rate risk is never a minor issue, the exchange rate is far more volatile than we can imagine (the reason why the RMB is not very volatile is because of the exchange rate control, once the control is released, the volatility will increase greatly) Diversifying exchange rate risk is actually very important. Since the country needs to diversify exchange rate risk by reserving dollar assets, it is even more necessary for ordinary households to implement diversification of exchange rate risk.
Allocation to U.S. dollar assets typically allows for.
- Purchase of real estate, such as property. Real estate is a large asset class that is common to all mankind, but of course, it is advisable to seek a professional real estate advisor as the laws as well as the market vary from country to country.
- Stocks, bonds, funds and other financial products. But these products are relatively high risk, for some ordinary people, the funds to the professional financial people to do, far more than their own to the U.S. stocks, Hong Kong stocks blind speculation more security.
- Configure some insurance, overseas. The U.S. insurance coverage is very strong, and the variety of products and features are among the top in the world. We often see the mega-rich, celebrities, etc., buying large amounts of insurance overseas, for the purpose of tax avoidance, of course, and property transfer, etc.
- Direct investment. For example, if you invest in building a factory or opening a hot pot restaurant, the professionalism of this is very demanding and risky because after all, different countries and regions have different cultures, markets, policies, laws, etc. If you want to invest, it is best to be guided by someone who has many years of experience living in the area.
Regardless of which investment option you choose, we recommend that you come together with a professional to organize your assets and understand your needs in order to finally construct the best asset allocation plan for you.
