Top money tip - key for reaping profits: How to ensure gains even during market mayhem

Top money tip - key for reaping profits: Amid market turmoil, panic stricken investors are confused about the next move for investing in stock markets. The biggest question before the investors is what to do next? Should they change the strategy or make alterations in the portfolio?

The answers to these questions is not a simple one but Zee Business Guest Pankaj Mathpal has some useful tips for the investors, which he gave during Money Guru show. 
 
Pankaj Mathpal's advice to investors is not to allow the bad market sentiments to worry you. The best solution in such times is to choose the right avenues for investment i.e. doing your asset allocation wisely.

The financial expert says that investors should form a balance between equity, debt and gold investments.

The question still remains how much to allocate in each of the three categories - equity, debt and gold assets.

Pankaj Mathpal says that it is critical to understand how much to invest in each of these asset
classes. The first thing that he advises is to set an investment goal. The other components of financial planning is to decide the duration of investment, understand your risk profile and your age.

Never put all your investment in one asset class as that could be risky. Equity investments are preferred investment options for a long term view. In an investment for a 10-year period, even a return of 10-15% could be achieved.

Make targets for small, medium and long term. Small term investments suitable for buying home, vehicle or for travel purposes. Debt funds are also good options for near term investments. Also, decide your investment goals depending upon your age.

For senior citizens, investment in debt funds is advisable. Equity investments are advisable if you have a long service period.

How much should be the equity allocation?

Let us assume that that an investor is 30 years old and his life span is 100 years. The approach for an investor should be (100-age)% i.e. 70% allocation for a 30 year old. For a 50 year old 50% fund allocation in equity is advisable. 

Review your asset allocation once in three months. Re-balance it if there is rise/fall of more than 10%. In uncertain times, remain invested for longer duration as volatility is likely to remain for some more time.

Gold is also seeing a lot of rise and fall. Gold prices are likely to fall further. The situation may improve if coronavirus impact subsides. However, never allocate more than 10% in gold. Gold ETF is a good investment option.

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Increase allocation in equity for long term investments. You can also take balanced advantage funds and index funds. Include multi-cap funds in your portfolio. Make investments through Systematic Investment Plan (SIP) and Systematic Transfer Plan (STP).