How to make a Good Portfolio?

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          The Corona Virus Outbreak has created havoc in the world. All stock markets in the world are corrected from their peak values as a result every individuals portfolio has bottom down except the few smart people who has a PROPER ASSET ALLOCATION. The main reason of writing this blog is to aware people about asset allocation, its importance and how to make it so that they can bear current market crisis. 

➤ What is Asset Allocation?

          It is a process in which investor make a decision of how much money to be invested among various asset classes. They are mainly 4 asset classes:
  • Stocks: It represent ownership into a business. In simple words, it is noting but buying some portion of company through stock market. It can be shares of company, equity ETFs, mutual funds, etc.
  • Fixed Income: It represents lending money to someone. It can be fixed deposit, recurring deposit, post office schemes, debt mutual funds, PPF, NSC, different bonds etc
  • Cash: It represents liquidity and power to buy things. It can be saving account balance, hard cash or online wallet balance.
  • Commodity: It represents ownership of goods which has end use. Here I am  considering only Gold.


 ➤ Why it is important?

          Financial market crisis are unforeseeable. As a result and according to classic financial market theory, a well diversified and well structured portfolio mitigates your investment risk. 
  • It helps in reducing your portfolio risk
  • It helps in boosting your return
  • It helps in addressing your liquidity needs as and when required.
  • It helps in determining right tax saving investment product.

 ➤ How to make a well-balanced asset allocation?

           There are many different types of strategies to make a well structured asset allocation but in this blog I am sharing my own strategy which is working for me since 2014.

 Three important factor to consider while making good diversified portfolio are:
  • Time horizon: It is the expected number of years you will be investing for achieving your financial goal (for example: reitire at 45 with 5Cr portfolio, or to have 10Cr till age of 60, etc). Your time horizon should be longer so that you can take more risk as a result your investment return will more.
  • Risk appetite: It is your desire risk you want to take while investing money in different assets. More risk may generate greater return while low risk will lead to safe and steady return. 
  •  Age: I have considered age as a factor because it will let you know how much risk is required to achieve your financial goal. If you are 25 years old, your risk should be high and if you are 35 years old, than your risk would moderate.

➤ Best Asset Allocation:

Here I have considered 60th years as retirement so my time horizon is long.

High Risk/ Aggressive


Moderate Risk / Balanced


Low Risk / Conservative


          Above three are general asset allocation chart which I personally consider to be best. However, in my asset allocation chart, I have given more weightage to gold (15%). You can customize your asset allocation as per your financial goal. And remember re-balancing is good at some stages but patience is key to success.


➤ Problem with Asset Allocation: 
  • Implementation is a challenge.
  • Investor agrees to asset allocation but after some good or bad return they decide to change the risk.
Above two problem are very common and I am sure every investor has to face it but overcoming these problem, will lead to fulfilling their goal smoothly.

          Finally, I would recommend everyone to consider asset allocation as a important key to a successful investment.  

These are my views so please do your research.



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