Risk profiling helps in asset allocation!

Asset allocation brings stability to your portfolio because of the presence of debt & other assets, and thereby it reduces the volatility that comes with equity. But it is a dynamic process. If the value of equity in your portfolio goes down, you must bring it up to your stated asset allocation level. Similarly, the case with debt & other instruments. The challenge is people think asset allocation is a complex process. How much should I put in each asset class to achieve asset allocation? When should I rebalance? At what point is the equity value high? When should I cut my debt holding? This can be better understood once you learn your risk profile.