With global markets on shaky ground and a potential downturn looming in 2025, investors with equity-heavy portfolios are being urged to reassess their asset allocation strategies. Among them is a 38-year-old high-earning salaried professional with a family of three, who has expressed growing concern over how his investments would weather a sharp market correction.
This investor currently allocates 75% of his wealth to equities, 20% to his provident fund (PF), and just 5% to gold. Over the past decade, he has maintained a disciplined approach by investing 80% of his Rs 1 crore annual income into equities, while keeping monthly expenses under Rs 1.5 lakh — a budget that covers rent, international travel, and provisions for his 5-month-old son’s future education.
Despite having built a robust equity corpus, he now feels the need to rebalance his investments amid fears of an impending market crash. According to Akhil Rathi, Senior Vice President of Financial Concierge at 1 Finance, “A high allocation to equity creates diversification risk that should be addressed.” He emphasized that while SIPs (Systematic Investment Plans) offer the advantage of rupee-cost averaging — especially during market dips — investors must also be mindful of overexposure to equities.
Rathi recommends reducing equity concentration to enhance long-term portfolio stability. This could involve gradually increasing exposure to traditional safe havens like gold and debt instruments. “Gold provides a hedge against inflation and economic volatility,” he explained. Products such as Sovereign Gold Bonds (SGBs) and Gold ETFs allow investors to build gold holdings without compromising liquidity.
Debt mutual funds present another reliable option, particularly for those who prioritize capital preservation and lower volatility. Rathi advised reallocating a portion of SIPs into high-quality debt funds to create a protective buffer against market downturns — all without undermining long-term growth potential. A suggested 20% shift from equities into a balanced mix of gold and debt could significantly enhance portfolio resilience.
Beyond asset reallocation, aligning investments with life goals is critical. With future expenses such as child education on the horizon, now is the time for investors to diversify — ensuring that important milestones are not compromised by short-term market turbulence.
While equities remain an essential tool for building long-term wealth, Rathi concludes that true financial resilience lies in diversification. A thoughtfully balanced portfolio comprising equities, gold, and debt instruments is the key to surviving market volatility and staying on course to achieve financial goals.
