Choosing the right investment strategy

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Mapping out a strategy is a very important step for an individual to achieve financial and investment goals. The plan needs to be designed specific to one’s goals, risk tolerance, and future needs for capital.

Money9 Helpline hosted Mohit Gang, co-founder and CEO, Money Front, to help our callers understand the right investment strategy that will yield the best results.

Here are some questions:

Samarjeet Kohli, Himachal Pradesh: Is Gold an option worth investing in in current times and how should one invest in gold?

Gang: Yes you should allocate gold investment in your portfolio. You must at least allocate a minimum of 5-10 % in gold. Gold is the best hedge option as even in inflation it will give inflation-adjusted returns. When volatility in equity markets will rise, it is a good hedge in that case also. As gold shows a positive rally in the case of negative equity.

You should invest in digital gold and in that also specifically sovereign gold bond. The next tranche of SGB will be in July. If you hold the SGB for a longer period like 8 years, your gains on that will be tax-free.

Abhishek Mall: Is it the right time to redeem mid and small-cap funds and park the amount in a liquid fund?

Gang: It depends on when did you invest in the funds and how much asset allocation is allotted to these funds. Last year there was around a 100 % rally in the small-cap and mid-cap funds. If your asset allocation has reached 25 %, then you can move to a debt fund or gold. If it is under-allocated then you must maintain the ratio.

Gautam Rana: Is it the right time to invest in hybrid funds considering the market level?

Gang: I believe in the philosophy that the best day to invest was yesterday and today is the second-best day. I suggest not wait for a particular time and start investing. Hybrid funds are a safe option, you can definitely look at investing in them. You should consider balance advantage funds.