The traditional 60:40 portfolio of stocks and bonds has long been the basis of asset allocation globally. However, in recent years, leading market experts have prompted investors to rethink how to create more flexible portfolios that can withstand the risks found in the market.
This is the benefit
In India’s rapidly growing economy, diversification across asset classes has emerged as an important strategy for wealth creation from different sources. As the country demonstrates resilience and sustained growth, savvy investors are looking to spread their investments across different asset classes to better manage risk and optimize returns. By allocating capital across equities, real estate, fixed income, and commodities, investors can reduce the impact of market volatility and economic slowdown.
The most important rule?
First of all, you need to understand how to manage a 60:40 stock-bond portfolio. If understood in simple language, it means that you will invest 60% of your investment amount in stocks and the remaining 40% in fixed-income investment options like bonds. The advantage of this will be that even if the market ever turns negative, you will still get a fixed income. Whereas if the market is bullish, you can easily make huge profits. So remember this rule today. It is not necessary to make money every time. It is also important to save the money earned. So, remember this rule.
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People who do not follow this rule fail during market crashes. It is often seen that people lose their capital due to carelessness. Therefore, investment should always be done following a rule.
