What is a Portfolio?
A portfolio investment is an ownership of a stock, bond, or other financial assets with the expectation that it will earn a return or grow in value over time.
What is Diversification?
Diversification is a technique that reduces risk by allocating investments across various financial instruments, industries, and other categories. It aims to maximize returns by investing in different areas that would each react differently to the same event.
Introduction
In India, many people invest for themselves but very few invest in the right way. People in India mostly invest in Fixed Deposits but while doing FD’s they don’t consider inflation. If we consider that bank interest is 3-4% and inflation is 6-7%, then one is incurring a loss of around 2-3% annually. The risk factor involved with Fixed Deposits is very low and so is the return.
In my opinion, investment should be carried out taking our age into consideration. Here are a few strategies for investing depending on the age group that you fall in.
Young Age (18-30yrs)
With minimal or no responsibilities of their family, people belonging to this age group can afford to take more risks. If the risk would be high then the reward, too, would be higher.
Investment Strategy for Young Age Group
Where to Invest? | How much capital? | Reasons |
Stock Market, Crypto Market | 50% | High risk, reward higher |
Government Bonds | 10% | For safe and passive income |
Gold/Silver | 20% | Safe and liquid money |
FD’s | 0% | Not Required |
Mutual Funds | 20% | For compounding growth |
Working Class Group (30-60yrs)
People belonging to this age group have the maximum responsibility of taking care of their families. Hence, they must invest wisely. Due to more responsibilities, the risk taken should be lower leading to a low, yet secured return of their investment.
Investment Strategy For Working Class Group
Where to Invest? | How much capital? | Reasons |
Stock Market, Crypto Market | 30% | Less risk capacity |
Government Bonds | 20% | Safe and passive income |
Gold/Silver | 10% | Safe and liquid money |
FD’s | 10% | Safe and passive income |
Mutual Funds | 30% | For compounding growth |
Retired Age Group (60yrs and above)
People who are 60 years old or more are retired in most cases. Thus, they need a very regular source of income to carry out their own expenses.
Investment Strategy For Retired Age Group
Where to Invest? | How much capital? | Reasons |
Stock Market | 10% | Very less risk-taking capacity |
Government Bonds | 15% | Prefer to invest less due to lock-in period |
Gold/Silver | 0% | Not required |
FD’s | 65% | Safe and Passive Income |
Mutual Funds | 10% | For compounding growth |
The above-given strategies for investments can be changed or enhanced depending upon the risk-taking individuals belonging to their respective age groups. In my view, these investment strategy tables would be the safest way to invest money and make stress-free returns.
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