As Samvat 2080 begins, investors should review their portfolio, diversify their investments and leverage market fluctuations to build long-term positions. The start of the new Hindu year presents a good opportunity to take stock of what went wrong in the past and correct it.

The current Samvat 2079 had started with the stock market recovering after consolidation.

While the markets will encounter short-term volatility, investors should follow a gradual approach while investing. Sushil Jain, CEO, PersonalCFO.in, says Samvat 2080 is the best time to plan your investment as the market is in range bound and interest rates are also at their peak. “So, both the asset classes are in a good position for long-term investments.”

Reallocate your portfolio

It is always better to review the portfolio regularly to ensure your investments are aligned with your goals and expectations. Review your portfolio every six months and re-allocate once in a year. Look into exit load, taxation and market conditions before making any changes.

Harshad Chetanwala, co-founder, MyWealthGrowth.com, says if there are investments that are underperforming it is better to reinvest elsewhere. “If you have not taken up the review process, you can certainly start this Diwali and do it at least every six months or every year,” he said.

Asset allocation strategy

The asset allocation needs to be based on your financial goals for the next Diwali. And if you have accumulated in equities then you can slowly shift the accumulated amount from equities to debt to avoid any impact if the market turns volatile in the near term. Staying invested and adding more in case of any minor correction could help in the long run.

Given the global uncertainties, investors should go for bottom-up plays and take some strategic long-term fundamental bets to ensure lower volatility in the portfolio. Aggressive investors can invest around 70% in equity, 20% in debt and 10% in liquid. Similarly, conservative investors can invest 60% to 70% in debt, 20% to 25% in equity and 10% to 15% in liquid funds. Moderate investors can invest up to 50% in equity, 30% in debt and 20% in liquid funds.

Consistency of performance, rather than top performances, should be taken into account. It is necessary to take account of risk adjusted returns instead of performance alone.

Mukesh Kochar, national head, Wealth, AUM Capital, says if funds are to be identified in conjunction with the trend of the market, then values such as standard deviations, Sortation Ratio, Sharpe and Beta should be used. “Proper asset allocation, with proper diversification and periodic rebalancing of the portfolio must be maintained at all times,” he says.

Gold as a crisis hedge

While the demand for gold rises over the festive season, individuals have been investing in the metal whenever there was a reasonable correction. In fact, had one invested in gold during Diwali 2019, the returns till this year’s Diwali would be 60%. Investing in gold for the long-term can be a good option this Diwali as the metal thrives during global uncertainties. Sovereign gold bonds can be one of the best options as it offers annual interest of 2.5% and does not attract capital gains tax if redeemed on maturity after eight years. However, interest income is taxed at the individual’s tax slab.