Static vs dynamic: Which asset allocation suits you?

Every investor knows that asset allocation is the bedrock of successful investing. It's the simple but powerful idea of deciding how much of your money goes into equity, debt, gold or other assets. But while the 'what' is clear, the 'how' can be trickier. Should you stick to a fixed allocation over time or shift your mix based on how the market behaves? That brings us to two contrasting approaches: static and dynamic asset allocation. Static allocation is straightforward. You decide on a mix - say 60 per cent equity and 40 per cent debt - and stick to it over the long term. Your allocation remains steady even if the stock market goes through wild