Investment Consultan Serives
This is the Right balance in investment
In our country, there is a lot of emphasis on fixed income investment. This nature is deeply embedded in the blood of every Indian. Yes, you can see PPF, FD, post office scheme and bank deposit certificates in any middle class family in India. Methods with fixed income are widely accepted as savings. Where there is always emphasis on equity (buying company shares) to make money in the long term, this fixed income mentality is affecting our investment scenario.
But, in recent years, a big change is being seen in this. Young investors are moving rapidly towards equity. The change in the methods of very conservative investment is a good news. But there is also a risk in it. In fact, many young investors are keeping 100% of their portfolio in equity mutual funds. This is a very risky strategy. The recent market volatility highlights these risks. Markets have fallen by about 10 percent since the end of September. This shows the basic principle of investing that diversification is very important for proper asset allocation. The success of your investments depends on your understanding of asset allocation, rebalancing and following it regularly. While doing asset allocation, investments between equity and fixed income are kept in a proportion that matches one's risk tolerance and financial goals.
Now, we are coming back to basics. When we think about earning profits from investments, three basic methods come to mind. First, earning interest by lending money, second, participating in trade through shares, third, taking advantage of appreciation in the prices of real estate or gold. When we build a portfolio well that includes all these factors, fixed income acts as a strong addition. The beauty of maintaining a fixed percentage balance between debt and equities is in maintaining discipline. When the equity market rises, rebalancing from time to time transfers some of the gains to fixed income investments, thereby securing the profits. Conversely, during a down market, rebalancing provides an incentive to buy equities at a cheaper price. This balanced approach prevents emotional decisions, as emotional decisions are often the biggest enemy of investment success.
We can see a strong argument for including fixed income investments in the portfolio, even for the most aggressive investor, as some fixed income allocation is a necessary shock absorber during market volatility. Hybrid mutual funds are a simple way to maintain this balance, managing the allocation of debt and assets automatically. Among fixed income investments, PPF continues to hold its appeal. Despite its long lock-in period, the tax savings on investment, tax free returns and government support make it an attractive addition to the fixed income portion of any portfolio. The recent market correction has further strengthened these age-old principles of investing. Instead of getting worried by the short-term market fluctuations, investors should focus on maintaining the right asset allocation in this market cycle.
If anyone wants to contact us for investing in the security market then he is welcome.
