Posts in category "asset-allocation"
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Tactical Asset Allocation vs Fixed Allocation
If you have been reading my blog for some time you probably already know that my asset allocation changes based on market conditions. I have my own set of rules using which I decide whether to be equity heavy or debt heavy. Of course there is no secret sauce involved you can do the same with data available on the internet. My question however is whether it is worth doing tactical allocation or is it just better to follow a fixed asset allocation plan. That is what I set out to find and here are my findings.
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Are Sovereign Gold Bonds a Good Investment Option?
Sovereign gold bonds are open for subscription starting today (July 6, 2020) and will end on July 10, 2020. Should you invest in them? Sovereign gold bonds are issued by RBI and thus are one of the safest investments. If you like to invest in gold, but don't want to hold physical gold, this is a good option for you. The issue price is set at Rs. 4,852 per gram, but if you buy online, you get a discount of Rs. 50. You have to buy a minimum of 1 gram up to a maximum of 4 kgs. But is this a good investment? If you rather watch a video instead of reading then scroll to the bottom of the post.
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Interest Rates On Govt. Schemes Have Been Cut
Finally some good news that I have been waiting for. The interest rates for the governments schemes have come down. Just in yesterday's post I have been complaining about the high interest rates of many of these schemes have been the barrier for the rate cut transmissions.
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How Am I Handling the Market
Given the current market situation, a few of my friends wanted to know how my portfolio is doing and what have I been doing during the crisis. So this post should hopefully answer these questions. I want to preface by saying that don't be fooled by randomness. I may have performed better or worse than you expect and it does not mean I made any smart moves nor that I made mistakes. Only note that luck favors the prepared.
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Debt Funds vs Fixed Deposits
If you ask someone whether Fixed Deposits are better or Debt funds are better, more likely than not, you will hear a biased answer towards either of them. Some swear by FDs and their safety, while others say debt funds always give better returns than FDs. Lets bust some myths and try to get an understanding of how these two types of investments work.
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Do You Need International Exposure
India is a growth story. As a developing nation, we obsess over growth rates. While most analysts hope for a sustained 8% growth rate from India, our government has sometimes vowed to take India into double digit growth. I am not really sure if that is even possible. Nonetheless, every time the growth rate falls just below 7%, media and analysts make a huge deal about it worrying why the rate is so low. A developing nation is expected to have a high growth rate and so do a lot of investors. So, should one invest in international funds which have a slower growth rate?
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Year In Review - 2018 Net Worth
The final chapter in the Year in Review series, is reviewing my net worth. At the end of every year, in addition to reviewing my returns and expenses, I also take stock of my net worth. It is an exercise not to check how much I am worth, but more to get an understanding of my asset allocation, and see if it is converging towards my planned allocation. Lets take a look at the constituents of my net worth first.
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Invest Across Market-caps for Better Returns
If you want better returns for your investments, choose to invest across market caps. Generally, choosing 2-3 good multi-cap funds is sufficient for most investors. However, if you want to be a bit more aggressive with your investments, add some small-cap and mid-cap funds. But how much? That is the question I will try to answer in today's post.
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My Asset Allocation
I have discussed the 70:30 asset allocation in my previous 2 posts. However, I did not really follow the rule, not because it did not work for me, but for the simple reason that I wanted to learn market cycles and take risk while doing my investments. I would not suggest anyone play with investments like I did (unless you know what your are doing) and risk losing money. Instead follow the boring simple rule of 70:30 and it works. This is more of a case study of my investing style.
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The 70:30 Asset Allocation
In my previous post, I talked about about allocating 70% to equity and 30% to fixed income and just keep that ratio irrespective of which stage you are in your life. But does it really work? Lets work out some examples to see how it might work under various conditions.
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