Dhirendra Kumar talks about an asset allocation plan for a retiree with no dependence on his investments for income.
Click here to watch the video
I'm 67, and I have a corpus of around Rs 2 crore. Around 65 per cent of it is invested in equity funds, 20 per cent in fixed deposits, and the remaining in debt mutual funds. Do I need to change the allocation to equity? My expenses are met from pension and rental income.
- PC Garg
Mr Garg, you are very lucky as you can see this investment grow. You should work towards configuring this investment so that your regret is low in case of a market correction. I would say that at all times, keep 50 per cent of the portfolio into equity and 50 per cent into fixed income, either through fixed deposits or by debt funds. Thus from that standpoint, you should rebalance your current 65 per cent allocation into equity and bring it down to 50 per cent.
You should frame a rule for yourself to move money from equity to debt or debt to equity if there is a more than 10 per cent change in the asset allocation. Following this rule will help you rebalance the portfolio and substantially enhance your return if you are disciplined about it.