I am 35 years old and I started investing in the stock market 5 years ago. I have a corpus of about Rs 1 crore which includes Equity (50%), FDs (15%), MFs (25%) and SGB (10%). I want to diversify my portfolio and explore alternative investment options as well. How should I start?
Reply by Nikhil Aggarwal, CEO & Founder, Grip Invest
Diversifying across equities, mutual funds, FDs, and Sovereign Gold Bonds (SBGs) is a smart start. While it offers a spread of risk and return, there’s room for optimisation.
Currently, 75% of your portfolio is market-driven that offers high returns, but also higher risk due to market fluctuations. While the remaining 25% of your portfolio (FD + SGB) may have low risk, they might not be ideal for your long-term goals due to their low returns.
To create a more well-rounded portfolio, consider alternative investments that bridge the gap between these two categories. Given your age, you can aggressively explore other alternative investment options like fractional real estate or Securitised Debt Instruments (SDIs) and allocate around 25% to them. These can potentially deliver returns of 10-14% with the added benefit of minimal correlation to the stock market and limited risk. In simpler terms, even if the stock market dips, these investments might not take a significant hit, further diversifying your portfolio and risk exposure.
In addition, you can allocate at least 10% to unlisted equity for maximum returns. While it could be a strategic way to target higher returns, it also carries a greater degree of risk. It’s crucial to thoroughly research these options before investing.
Consulting a financial advisor can be highly beneficial. They can help tailor an investment strategy that aligns with your risk tolerance and long-term goals, ensuring a healthy portfolio that works for you.
(Views expressed by the investment expert are his/her own. E-mail us your investment queries at askmoneytoday@intoday.com. We will get your queries answered by our panel of experts.)