Choose quality over quantity

PORTFOLIO MAKEOVER

Small allocations would not add any value to the overall portfolio. If a fund outperforms but has a meager allocation, the portfolio would not benefit from it. Make sure you allocate a significant part of the portfolio to a stock or a fund.

Avoid speculating and stick to funds that have proved their mettle. Invest in well rated funds that have been consistent. Look at a 3-5 year performance history and the stars assigned to the fund before investing.

Quality is more important than quantity. Investing and managing so many funds can become a tedious task especially when it comes to redemptions.

Invest in fewer funds and do not get lured towards the new fund offerings. Add a new fund to your portfolio only if it adds a unique diversification.

Some significant component of debt is always helpful to a portfolio. Debt plays a major role in a bearish stock market and provides the cushion when markets tank.

Ensure that the portfolio has a healthy debt component irrespective of the risk that you can handle. You can also invest in government debt instruments like bonds, fixed deposits or NSCs. However, they are not as tax efficient as the former instruments.

Once you are done with the equity debt allocation, make sure you re-check the allocation and re-balance the portfolio (if required) at least once a year. This should also be done when stock markets crash or rise rapidly in a small interval.

Being regular is very important while investing in funds. It is not possible to time the markets, nor should one try to do so. Be regular and be systematic. Even if you prefer doing one time investment at times, you should also have SIPs to complement those.

Set a ceiling on exposure to a particular sector or stock/fund. High exposure would make the portfolio largely dependent on its performance.

Do not worry about short term fluctuations in the markets. Market sentiments can change overnight. If you are a long term investor you should not worry about the market gyrations.  Now that the investing strategies are clear, here