When you are in the retirement planning stage of your life—in your 30s or 40s—most advisors highlight the role of equity-oriented instruments, as they give the much-needed kicker to your portfolio.
However, what often gets ignored is the role of debt instruments, such as debt mutual funds, fixed deposits (FDs), National Pension System (NPS), Public Provident Fund (PPF), and small savings schemes in the portfolio.
Debt instruments balance risks and rewards in a portfolio, which is essential for making any realistic plan towards achieving long-term goals.
Says Sumit Madan, head, retail liabilities and branch banking, IDFC FIRST Bank: “Debt instruments play a vital role in retirement planning by offering stability, income, liquidity, and a hedge against inflation. Balancing these instruments with other asset classes is key to constructing a resilient retirement portfolio tailored to individual needs and risk tolerance.”
So how does debt provide stability to a portfolio? Dilshad Billimoria, founder, managing director and chief financial planner at Dilzer Consultants Pvt. Ltd, a Securities and Exchange Board of India (Sebi) registered investment advisor (RIA), explains with an example. Suppose an aggressive investor has 90 per cent of her portfolio in equity and the market suddenly falls, or she needs funds in the next eight months, she would lose her principal and would not be able to exit. “Therefore, adding debt to a portfolio is crucial from a goal perspective as well as for short-term fund. Debt lends stability to the portfolio, besides asset allocation, which is an important aspect in portfolio construction,” she says.
هذه القصة مأخوذة من طبعة December 2023 من Outlook Money.
ابدأ النسخة التجريبية المجانية من Magzter GOLD لمدة 7 أيام للوصول إلى آلاف القصص المتميزة المنسقة وأكثر من 9,000 مجلة وصحيفة.
بالفعل مشترك ? تسجيل الدخول
هذه القصة مأخوذة من طبعة December 2023 من Outlook Money.
ابدأ النسخة التجريبية المجانية من Magzter GOLD لمدة 7 أيام للوصول إلى آلاف القصص المتميزة المنسقة وأكثر من 9,000 مجلة وصحيفة.
بالفعل مشترك? تسجيل الدخول
Stay Ahead Of AI-Powered Cyber Fraud
AI has become an integral part of our lives, right from customer service at banks to insurance claims. But it has now become a powerful arsenal for the fraudsters too who are increasingly using AI to scam individuals and corporations alike to commit fraud. The key is to stay vigilant
Travelling To Europe? Pack In The Essential Covers
Smart travellers must know that insurance is a must-have. From essential health coverage to theft protection and trip interruptions, know what you need for a worry-free Europe trip
How To Spend Wisely This Year-End
We all spend during the year-end. But the trick is not to overspend or borrow, either from friends, or your own investment, to fund your indulgence. Maintaining balance is the key
Travel Now Pay Later (TNPL)
Travel now, pay later (TNPL) is a close cousin of the more popular buy now, pay later (BNPL) schemes.
12 Books Devina Mehra Loved Reading In 2024
Listing books of her choice, among the ones she reads during the year, is ace investor Devina Mehra's favourite year-end activity. She says it's a daunting task to pick around 12 books from a list of 50.
Here's How To Avail Of Ayushman Bharat Yojana
Launched in 2018, the Ayushman Bharat Yojana aimed to provide health coverage to targeted benefi ciaries from the Socio-Economic Caste Census (SECC) 2011, based on deprivation and occupational criteria.
'Focus On The Business, Assess If You Want To Be A Partner For 10-20 Years'
Professor Sanjay Bakshi, a value investor, behavioural economist and adjunct professor at Flame University, Pune, gives his unique perspective on how to choose a stock, in an interview with Nidhi Sinha, editor, Outlook Money, as part of the Wealth Wizards series. He also shares his learnings from role models Warren Buffett, Charlie Munger, Benjamin Graham and others, and how being a chartered accountant, economist, investor and teacher make him into what he is today. Edited excerpts from the interview
The New Trump Card For IT, Pharma
Donald Trump has been re-elected as the 47th President of the US after a gap of four years. Here's how it will affect the Indian markets and how it will benefit sectors such as IT, pharma, export-oriented sectors and others
European Sojourn
Tight on budget? Dump the popular European destinations for the little-known wonders that are equally attractive
Gold ETFs And FoFs
While Indians love to invest in physical gold, even mutual funds offer the option, but in paper format.
