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Is it safe to have all my investments in equity or should I change my plan?

One should reflect on one's own behaviour towards the volatile nature of equity and decide accordingly, suggests Ashutosh Gupta

I have a long-term horizon of 15 years. I am investing Rs 50,000/month. Most of the investments are in equity, spreading across large, mid and small caps. Is it safe to have all my investments in equity or should I change my plan?
- Darshan B P

Well, your investment horizon is suitable for an all-equity portfolio. But with regard to whether you should continue it or add a little bit of debt to your investments, you would be the best judge to decide it. You should check whether the ups and downs of the market make you too nervous. If we look at it this way, the last 10-12 months in equity markets have provided an excellent opportunity to investors to assess their risk appetite in a way that no risk assessment questionnaire or an investment advisor can do.

You can reflect back on the sharp market fall in the month of March and think whether that made you very nervous or left you having sleepless nights. If yes, then probably an all-equity portfolio is something you should move away from and add 20-25 per cent debt to your portfolio, which you can simply do by shifting to aggressive hybrid funds from the existing pure-equity ones. But on the contrary, if you have been able to sail through these 10-12 months of volatile markets without much botheration, then, by all means, you can continue with an all-equity portfolio.

This is how you should reflect upon your own behaviour in the last 10-12 months to figure out whether or not an all-equity portfolio would suit you.

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