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Should I follow the '100-minus-your-age' rule?

Asset allocation varies from person to person depending on their circumstances, says Dhirendra Kumar

I am a senior citizen and have been investing in mutual funds for a long time. I have my investments in HDFC Balanced Advantage Fund and HDFC Equity Fund. These funds have not been performing since a while. Should I continue my investments? I don't require the money for the next five years.

Also, most of my investments are towards equity. Should I follow the '100-your-age' rule and shift some portion towards fixed income?
- Suresh

To answer your second question first, any such formulas are indicative in nature and none of these should be followed blindly. This is because each investor has individual circumstances and therefore, these rules may not necessarily be suitable for everyone.

A 70-year-old who doesn't require this amount in the near future can easily stick to equity. However, two years before you anticipate any income requirement, start moving a portion of your money towards fixed income. This is because it is better to be prepared in advance rather than be dependent on the market for any income requirement.

Regarding your first question, both HDFC Balanced Advantage and HDFC Equity have underperformed their respective categories but their performance may revive.

Having said that, it is better to judge according to your own circumstances. There is a bit of an overlap in the portfolio of these funds. So, analyse and ensure that not all of your capital is invested only in these two funds. But if that is the case, you may consider investing only half of your capital in these two funds.