Trimming equity exposure: how to rebalance risk according to long-term goals — SkimNews
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- Nifty 50 reached a high in September 2024, after which markets became more volatile, potentially unsettling investors who began building portfolios after the pandemic.
- For long-term goals still 20 years away, such as retirement, 60-80% equity allocation could be considered with the remainder in debt, leveraging equities' historically stronger long-term growth.
- Short-term goals warrant reducing equity exposure and shifting a larger portion toward debt or relatively stable options such as arbitrage funds.
- Medium-term goals like buying a house in seven years may justify a 50-70% equity allocation, balancing growth potential with greater stability as the target date approaches.
- Feroze Azeez, joint CEO of Anand Rathi Wealth Limited, emphasizes that an adequate emergency fund combined with health and term insurance reduces the likelihood of forced equity sales during unexpected expenses.
- The piece reframes equity discomfort as a goal-alignment question rather than a market-timing one, urging regular portfolio reviews tied to changes in goals or circumstances.
Why it matters: Investors who built portfolios after 2020 have only witnessed the Nifty 50's pandemic recovery through its September 2024 peak before volatility returned, making goal-based allocation guidance particularly relevant as this cohort reconsiders risk after their first sustained drawdown.
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