There is a famous saying – never put all the eggs in one basket. The same saying applies when making financial planning. If you have 100 rupees then invest it in different instruments so that if there is any risk then there is less loss. Explains the math of diversification of this investment
Ajit Singh’s report-At this time good stocks are available at cheap price
Waqar Naqvi, Managing Partner, Wright Standard Ventures LLP says that for a lay investor, it is the right time to invest only when investment instruments are available at an affordable price. Along with this, it should also be kept in mind that there should be a scheme of such a fund, through which investments can be made in many places. Be it gold, stock or date. These are areas which are at a low level right now. So now is the right time to invest in them.
Where the stock market has broken about 17 percent from the high level, while gold is also down by 5 thousand to 51 thousand from the all-time level of 56 thousand per ten grams. Now interest rates in debt are going up. Banks have increased the interest on Fixed Deposits (FDs). Companies have also taken the same route. The current trend of these three sectors is that they are expected to give more than double digit returns in the next one year.
Asset allocation is not an easy task
Investing in multiple asset classes is a challenging task. Investors are often puzzled by whether valuations for a particular asset class are cheap or expensive when making an investment decision. One of the challenges is when to enter and when to exit a particular asset class. Hence, it is not an easy task to invest in the right asset class whenever required and then rebalance it.
Asset Allocator Fund specializes in tackling challenges
The data shows that the asset class (equity, debt and gold) schemes that make investments tend to be long term in mind. A common man will not be able to decide when to invest in shares, debt or gold as he does not have that much experience. But the fund managers of the scheme of mutual funds, they have mastered this work.
- 4 times return in 10 years: One would have invested a lump sum of Rs 10 lakhs in Nifty in March, 2010, then it would have been Rs 39.03 lakhs as on 31st May, 2022. Meanwhile, this investment in the asset allocator scheme of ICICI Prudential has also gone up to Rs 41.41 lakh. During this period, the investment in the scheme’s stock was only 43 per cent.
- Structure of Fund of Funds: The scheme has a fund of funds structure. That is, this scheme invests in the scheme of some other fund house. The special thing is that depending on the valuation model, investment in shares and debt can be from 0 to 100 percent. This means that whatever is available cheaply, more will be invested in it.
83% investment in shares in March 2020The asset allocator’s investment in the stock market was 83 per cent in March 2020 during the start of Corona. But as the markets picked up, this investment came down to 45 per cent by December 2020. By May 2022, it has come down to only 33 per cent. This will further decrease as the market improves further.
Gold helps fight inflation
Asset allocation plays an important role in any investment. This fund helps you to achieve your goal. Debt provides stability in investment. Whereas gold helps in fighting inflation. The stock market gives investors an average return over a long period of time. -Pankaj Mathpal, CEO, Optima Money Managers
Expansion
There is a famous saying – never put all the eggs in one basket. The same saying applies when making financial planning. If you have 100 rupees then invest it in different instruments so that if there is any risk then there is less loss. Explains the math of diversification of this investment Ajit Singh’s report-
At this time good stocks are available at cheap price.
Waqar Naqvi, Managing Partner, Wright Standard Ventures LLP says that for a lay investor, it is the right time to invest only when investment instruments are available at an affordable price. Along with this, it should also be kept in mind that there should be a scheme of such a fund, through which investments can be made in many places. Be it gold, stock or date. These are areas which are at a low level right now. So now is the right time to invest in them.
Where the stock market has broken about 17 percent from the high level, while gold is also down by 5 thousand to 51 thousand from the all-time level of 56 thousand per ten grams. Now interest rates in debt are going up. Banks have increased the interest on Fixed Deposits (FDs). Companies have also taken the same route. The current trend of these three sectors is that they are expected to give more than double digit returns in the next one year.
Asset allocation is not an easy task
Investing in multiple asset classes is a challenging task. Investors are often puzzled by whether valuations for a particular asset class are cheap or expensive when making an investment decision. One of the challenges is when to enter and when to exit a particular asset class. Hence, it is not an easy task to invest in the right asset class whenever required and then rebalance it.
