Why investing in EQUITY IS important during all periods of your investment journey

 Continuing my earlier blog, my thoughts on investing , particularly the parts of the investing which needs attention, I would like to share here.
First, the goals for which investing is being carried out, are to be defined.
It can be 1) Educational goals for your children
               2) Purchase of a dwelling (House / Flat)
               3) Marriage expenses of the children
               4) Last , but the most important, to provide for income, in the post retirement life.
After the goals and the amount required for them are determined ( I know these things are estimates, which may need periodic revision, but that can be tackled later), the instruments through which the corpus aimed are to be determined.

                               Now, during working life, investing can be a little aggressive. Growth is to be                                 given a  premium, but at the same time, stability of the portfolio is also                                         important..

                           Here is where the asset allocation is important. We must have a clearly                                 defined strategy, both during working life and in the  post retirement  period.

                            While the general consensus is that we should strive for growth during                                     working  life, for the stability of portfolio, the percentage of investment in                                 bonds/ debt side  is also of equal importance. 

                          One can very well have a have an 80:20 asset allocation to Equity vs Debt                                 during working life. Many can be found to have only equity in the portfolio in                                the never ending quest for returns while ignoring safety.

                           This is to be continuously reviewed and the percentage is to be revised ,                                    some  years ahead of your retirement to maintain a comfortable ratio.

                            However, in post retirement life investing also, a definite percentage of the                                 corpus is to be retained in the equity to give the total corpus a decent                                       enough    growth rate , that enables it to beat the inflation and have a positive                             real return  (Growth rate- inflation).

                         This is very important during the post retirement period in which people give                             more emphasis on safety of the capital. While I agree safety of the capital is                               very important, one cannot go overboard and invest only in safe instruments.

                         A balance, that is , the ratio, with which you are comfortable, is to be                                         maintained.

                          This is personal finance and the ratios as well as the corpus are very                                         personal  and vary from person to person.

                       The important thing is to maintain a balance and not go overboard in either                               direction, not being too aggressive in working life, while accumulating corpus,                            nor to be too safety oriented in post retirement phase denying your corpus, a                             much needed " kick" in the growth rate.

                       I will return with my thoughts on the subject shortly.

Visit after a long time- Thoughts on investment

 It has been 15 years since i wrote a blog on this site.

High time I return to pen my thoughts.

I feel that the awareness about investing , more specifically, goal based investing

is very less in India.

I find people asking " which is the best avenue to invest?"

If i say, if you don't have expertise, mutual funds is the best vehicle ,

I am asked " which is the best scheme to invest in?".

First and foremost, I must acknowledge that I have been influenced to a 

great extent by www.freefincal.com , next by Facebook group Asan Ideas for Welath, 

then i was trying to learn a lot from videos of Prof M Pattabiraman, "Pattu" the brain

 behind freefincal.com site and one of the prinicpals behind FB group,   Asan Ideas for

 Welath, (AIFW).

So, friends, if you want to start the investment journey, apart from the above sources,

please look for my thoughts, in this blog.

Will start posting from now.