Creating the right portfolio is an important task for every investor, as it not only helps in achieving your financial goals but also helps in protecting you from market fluctuations. It is very important to maintain a balance between equity and debt for the right investment strategy. By doing this, you will be able to balance risk and return according to your risk profile i.e. risk taking capacity and investment goal. A right and balanced portfolio can generate positive returns even amidst market turmoil.

What is equity and debt?

Both equity and debt have their own importance. Equity investments generally offer high returns in the long term, but are also associated with high risk. If your goal is long-term wealth creation and you are willing to take risks, equity may be the right option for you. On the other hand, debt investments like PPF, FD and post office schemes offer stable and safe returns. Such investments help reduce risk in your portfolio and provide stability and security during market downturns.

equity and debt share

Proper asset allocation is the backbone of your investment portfolio. Deciding how much equity and debt should be in your portfolio depends on your long-term goals and risk appetite. For young investors, a ratio of 70% equity and 30% debt may be appropriate, while for investors nearing retirement, investing 40% in equity and 60% in debt may be a better strategy. It is also important to review your portfolio from time to time and adjust it according to your changing goals and market movements.

Investing in Portfolio Rebalancing

Rebalancing your portfolio from time to time can be a major factor in the success of any investor. By doing this, you can keep your portfolio fit for the times. When the market is bullish and the equity portion increases, it is wise to take out the profit and re-allocate or transfer it to debt. Conversely, when the market is down, buying equity at a lower price can prove beneficial in the long term. Such a strategy saves you from making investment decisions on an emotional basis, which often becomes the reason for investment failure.

Balanced Investment

If you lack the expertise or time to maintain a balance between equity and debt in your portfolio, hybrid mutual funds may be the way to go. These funds automatically allocate your investments into debt and equity and rebalance them from time to time. Apart from this, they also provide stability during market volatility.

Also read : Sukanya Samriddhi, PPF, Kisan Vikas Patra, how much interest and maximum benefit in this

The right balance of equity and debt can give investors better returns in the long term. Depending on your investment goals and risk-taking ability, you can choose Aggressive Hybrid Mutual Fund, Balanced Hybrid Mutual Fund or Conservative Hybrid Mutual Fund.

Benefits of investing in PPF

Public Provident Fund (PPF) is considered one of the safest and most popular investment options in India. Not only does it offer you the benefit of saving taxes while investing, but the returns on it are also completely tax-free. Its lock-in period of 15 years is quite long, but due to its stability and security along with good returns, it should be included in every portfolio for long-term investment.

Investing is a must

The fall in the market has reminded us how important a long-term perspective and the right strategy are in investing. Instead of getting worried about the short-term fluctuations in the market, investors should balance their portfolio according to the market cycle. Always remember that the right balance of equity and debt is very important to keep your portfolio strong and profitable.