Asset allocation explained: Why equities, debt and gold should all have a place in your portfolio? Expert explains
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- Aditya Agarwal, CFA and Chief Investment Officer at Avisa Wealth Creators, stated that asset allocation is one of the most important drivers of long-term investment outcomes, often having a greater impact than individual security or fund selection.
- Agarwal recommended an 80% equity, 10% debt, and 10% gold allocation for a 25-year-old with a long investment horizon to maximise long-term wealth creation.
- For a 45-year-old in peak earning years, Agarwal suggested a 60% equity, 30% debt, and 10% gold allocation, balancing growth with capital preservation.
- Agarwal advised retirees aged 65 to shift to 20-25% equity, 60-70% debt, and 5-10% gold to prioritise income generation and capital protection.
- Agarwal said equities provide long-term wealth creation and help beat inflation, while debt offers stability and predictable income, and gold acts as a hedge against inflation, currency weakness, and geopolitical uncertainties.
- Agarwal recommended that portfolios be reviewed annually and rebalanced periodically to remain aligned with long-term financial goals rather than short-term market movements.
Why it matters: Indian retail investors who have endured Nifty50 underperformance over the past year now have a concrete, age-based allocation framework — shifting from 80% equity at age 25 to as little as 20-25% by age 65 — that ties portfolio construction to life stage rather than market timing.
