Holi is the festival of colours, joy and cheerfulness, which brings energy to all of us. On the similar lines, to bring in energy and growth in our portfolios, we must add some more colours to it which simply means that we need to add different asset classes in our financial kitty in order to make it robust and a long term wealth creator one.
Let me discuss a few very common things which I find missing in the majority of portfolios.
1. A lower percentage of equity in the portfolio:
There is no asset class which can beat equity returns in the long run but, the problem with this segment is that people consider investing in equity as if playing in a casino where more often than not, you are on the losing side. If we consider equity as a partnership in business, we are bound to get some encouraging results over the long term.100 minus your age is the heuristic which can be strategically followed while investing your corpus in this market. Say if you are 40 years of age then you can keep 100-40 which is 60 per cent of your portfolio in equities
2. Mid and small-cap exposure:
At least, some portion of your long term equity portfolio can be kept in small and midcap funds as they generally outperform the large-cap ones over the long term because of the faster growth of these companies. Exposure in this class will help you to generate some decent out-performance over the years to follow.
3. Global exposure:
Home biasness do not allow us to see global investment options. Most of the investors do not have global exposure. We need to understand that by investing only in our country we are increasing country-specific risk towards our portfolio. We have witnessed earlier also that any currency crisis or oil shock can deeply hurt our holdings. Thus, investing in funds that have global exposure can help us to weather the storm.
These are some out of the several colours that I would strongly recommend you to add into your portfolio to make it more healthy for the long term.
There was an interesting study performed by the Harvard Business School regarding the correlation of age of human being with health parameters. They did not find much consistency between the two. As per the study, your age is not decided by criterion like cholesterol etc. but by the happiness and stress-free life that you spend. The similar study says that happiness lies in the work that you do, the quality time spent with your friends, family and dear ones.
I wish and pray that this celebration of colours brings in lots of wealth of happiness and optimism in your life. Happy Holi!