While this sounds like something your parents might say, the saying ‘Don’t put all your eggs in one basket’ is super relevant for the investments of today.
Don’t have all your money in one place as you could lose it all in one go. Diversifying your investment portfolio through asset allocation should be the thumb rule of every individual who invests. You can do this by investing across various asset classes such as:
a) Equity mutual funds
b) Debt products
c) Gold
d) Real estate
e) Cash
and more.
Asset allocation will depend on various factors like an individual’s risk profile, age, investment time horizon etc. With proper asset allocation in place, your investment portfolio can benefit from the negative correlation between different asset classes. For example, in the first half of 2020, the stock markets went down but gold gave one of the best returns in almost a decade.
Actionable tip: Based on your risk profile, have an appropriate mix of different asset classes like equity mutual funds, debt products, and gold in your portfolio. Equity mutual funds have the potential to give inflation-beating returns during good times. Debt products will lend stability to your portfolio when equities are down. Gold will provide a hedge against inflation and support the portfolio during uncertain times.
- ELSS Mutual Funds
- Liquid Funds
- Gold
- FDs
- Savings Account
- Real Estate
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