We DO NOT put all your eggs in one basket. This adage is apt for investment decisions too. A well-planned asset allocation in one's investment portfolio is important for consistent long-term returns. The normal tendency of average investors is quite often to concentrate in an asset class after it has started flying high. Thus, when our stock market our stock market is hitting an all-time high everyday, more money is pouring in from investors in primary and secondary market issues.

This is often true for domestic and foreign, individual and institutional investors. Interestingly, we are currently witnessing a unique investment climate when most asset classes, from real estate to precious metals, commodities to equities are at all-time highs in Indian and global markets.

However, this all-round bullishness generates uncertainty and high volatility, making life difficult for short-term investors. Those who invested in any of these asset classes regularly over a period of time, instead of trying to time the market, have reaped maximum benefit from this secular bull cycle. Even for investors sitting on huge profits, it is important to plan for further investments and reinvestment. Asset allocation is important to address the need of investment planning. In fact, asset class diversification is in-built in human psychology. Thus in relatively unsophisticated rural India, men regularly invest their surplus in land, while women folk invest in gold.

As both the asset classes have risen over time, these investors must have benefited in the process. For High Networth Individual (HNIs), there are many more opportunities for developing well-planned diversified portfolio through a disiplined approach. While planning investment, HNIs should first take full advantage of all investments providing tax benefits. These include investments under Section 80C, dividend from good quality equity mutual funds, etc. Then, balance investable surplus should be divided between low and high risk, short and long term investments, depending upon one's risk appetite and spending obligations. Bank deposits are low-risk investments directly into stock market or through mutual funds provide better returns with higher risk, which can be significantly smoothened by regular investment, instead of being too bullish in a favorable market and vice versa. Property market offers long-term safe returns, besides providing shelter.

For HNIs with higher risk appetite and ability to withstand short-term volatility, the scope of investing in commodities is improving in India. Most major equity brokers are now offering these products. Private equity funds, hedge funds, real estate venture funds, capital guaranteed products are some asset classes available to overseas HNIs. A limited allocation in these asset classes with careful study can provide useful diversification for the wealthy. After domestic investments, HNIs can also seas instruments. With increasing liberalization and the likelihood of capital account convertibility in near future, Indian investors will be able to diversify their portfolio for best value in any desired asset class, with equal ease.

Multiple asset class with multiple reputed managers in multiple markets are a safe, long-term way to multiply your wealth. (The writer is director, financial services, Aditya Birla Group. The views expressed by the author are personal)