- Systematic investment plans alone are insufficient for building diversified wealth portfolios
- Fixed income instruments and gold provide stability against equity market volatility
- Investment allocation depends on individual goals, risk appetite, age, and income
Systematic investment plans are a useful way to create a corpus for future needs like retirement. But in today's world, investing in an SIP is not enough to build your wealth.
For a diversified investment portfolio that protects you from any financial emergency later on, you must look beyond SIPs. Fixed income instruments and gold are options that offer reliable returns.
How To Invest In Fixed Income And Gold
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SIPs are equity-focused, meaning your returns can be volatile in the short term. Fixed income instruments and other asset classes can offer a buffer against volatility. A diversified investment portfolio across multiple asset classes such as debt, gold, equities, and real estate ensures that poor performance in one sector does not derail your financial plan.
The exact composition of your investment portfolio depends on your financial goals, income, age, and risk appetite. People with a moderate risk appetite may put 50% to 60% of their money in equities and divide the remainder among gold and fixed-income securities like bonds.
For those who are more tolerant of risk, a higher proportion of their funds can be invested into equity instruments like SIPs. As for age, it may be easier for you to take more risks while in your 20s and 30s, as there are fewer financial needs competing for attention. This means putting a higher proportion of your investment in equity compared to gold and other asset classes.
If your investments do not give the expected return, you also have more time to change your portfolio or recreate your fund. In your 50s, with retirement coming closer, it may be prudent to take a conservative approach and 40% to 50% of your funds in fixed income instruments.
As for gold, you can consider alternatives to physical gold, such as exchange-traded funds.These instruments are highly liquid and often do not have a lock-in period. A final thing to keep in mind is that simply setting aside money for investments is not enough. You must review your financial goals and your investment portfolio from time to time. This allows you to change your portfolio according to how the market is moving and your needs.
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