“Mutual funds are subject to market risks. Read all scheme-related documents carefully.”
27 August 2022
Different asset classes have various return cycles at different times, risk exposures.
Performance of investment is not guaranteed to match expectations when spread over many asset classes.
Investor's investing choices also often change over time as a result of experience and changes in risk tolerance.
Financial objectives could change, resulting in a lower or higher corpus requirement.
Portfolio may need to be properly rebalanced depending on market valuations.
One should try to allocate more funds to equities when the market is trading at lesser valuations so they can profit from the current valuations.
To avoid portfolio losses during market crashes, one should try to book profits when the markets are trading at higher valuations and rebalance portfolio toward debt.
Portfolio rebalancing should be aimed for on a regular basis, ideally once year.
The secret to building long-term, risk-adjusted wealth is asset allocation. Depends on the expected returns, time horizon, and risk tolerance.