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Should I invest in equity or debt when the markets turn volatile?

Dhirendra Kumar talks about the importance of asset allocation and rebalancing of portfolio during volatile markets


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In the current market scenario when it is so volatile, should I invest more in equity or in debt? I'm 64 years old.
- DP Singh

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One can't decide it now and more so for a 64 year old person, I think it's important to device your rules and decide on an asset allocation. This is after assuming that you don't need any income from your investment these are still your long-term investments. Deciding on an asset allocation and rebalancing it helps in the sense that depending on what happens every six months either equity does well or equity does poorly, things will be taken care of. One can't really time the market or be 100% invested in equity or 100% in debt, based on a view that where the market is likely to be.

There are two rules to be followed while rebalancing your portfolio. First, decide on a time frame and act only when the changes in your asset allocation crosses a 10 per cent threshold. Second, rebalance your portfolio in a manner that you are aware of both the tax as well as the exit load implications of it. Devising a periodic rebalancing plan and keeping an eye on your asset allocation itself will do the job.

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