Have you been deciding on your portfolio or trying to rebalance it because it is blown out of proportion? It happens to every investor. If you are wondering if there is a standard way of how your portfolio needs to be organized - well, that is a tricky thing to answer. Well, here it is - the proportion of your portfolio depends on several factors. These factors include risk, age, tenure, and financial objective. Therefore, each person's portfolio needs to be different because these factors vary for each person. But, let's look at a small way you can do this here. How to organize your investment portfolio? Age: It is one of the essential elements that you would have to determine the portfolio distribution. The good thing is, when you are younger, you can make more informed decisions. '100 - your age rule' of thumb describes that you are allowed to allocate 60% of the portfolio to equities if you are 40. Therefore, the following can be followed: \tGold - 10% \tMutual fund - 10% \tFixed deposit - 20% \tEquity - 60% Right now, there are so many questions in your head, right? Don't worry - we have got all those answers here. Why do you have to invest 20% in fixed deposits? Fixed deposits have been around for quite a long time, don't you think? Yet, they hold such a big stand in today's market too. What makes them such a desirable investment vehicle? Since you are investing a lot more in equities (given that equities have a higher risk factor), you would want another safe case to safeguard your money and have another source of finances to rely on. Several reasons your FDs need to use a higher proportion in your investment portfolio. Why do FDs have higher importance? Here are some of the major attributes for why Fixed deposits hold high importance in your portfolio: \tFixed deposits have a guaranteed return, and you will not be put under any pressure to lose your money. \tFixed deposits are one of the most flexible investments after mutual funds, except mutual funds carry a certain amount of risk. Therefore, we can say mutual funds have 0% risks and are flexible (you can opt for them for months to 10 years.) \tYou can rely on fixed deposits for emergencies or surplus requirements, too, that is because they have a small penalty when broken off early. \tFixed deposits also have tax benefits that you can enjoy. \tEven when your other investments are getting a little stumbly, you can rely on your FDs for a financial backup. \tYou can enjoy greater returns when you invest a greater amount in FDs. Apart from these, you can see that parts are also allocated to equities, gold, and mutual funds. You would want to know more about them to balance your investment portfolio. Why gold? One good reason you need to invest in gold, and that too 10% of your finances, is because - it is one great factor that will support you against inflation. Gold will also grow when there is inflation so that you won't be left alone with the value of your money going down. Why equities? Investments in equities are essential, not because they are riskier, but because they will give you the highest returns. As you know, this analysis of investing 40% in equities is based on age calculation. You might also want to add a risk factor to this investment. But, when you can afford to invest in equities or maybe lose some money - equities are a great choice. You can easily make over a year what you make over 5 to 10 years in other forms of investments. This is a great way to reward yourself. Yes, there are ups and downs, but you will have to be able to face them down the road when you invest in equities. Why mutual funds? Mutual funds are also part of the stock market, except they are formed by asset management companies and are pooled in investments. What happens when something is 'pooled in?' Well - for instance, what happens if you are taking a road trip to the Himalayas, and three other people pool in the drive? Your financial outgo becomes much lesser. In the same way, when you invest in mutual funds, it will mean your risks are distributed since they are a pooled investment from the company. Also, mutual funds give you various other possibilities. They let you invest in the long, short, and mid-term. You can also choose between SIPs, single payments, dividends, and more. This option will leave you more on the safer side of your investment. Do you 'need' to have fixed deposits in portfolio? This is a big yes. You will have to have fixed deposits in your investment portfolio. Firstly, every other form of investment vehicle has a downside of risk to it because it is associated with the market, but that is not the case with fixed deposits. Even when the whole country has a financial downturn or a crisis, your FD will still not fall in rates. This means that even when everything in the market is falling, you will get what you were assured with your fixed deposits. Even with gold, that is not the case. Even with gold (though rare), there are chances that the value of gold can change. Final thoughts Here is an example of what you could do with your investment portfolio. You will have to consider several other factors while forming your investment portfolio; they include age, risk, time, and so much more. If you can't take risks, you need to reduce your investments in equities and mutual funds and increase them in fixed deposits, government bonds, and much more. This will make sure that you do not lose any money in the process of investing. 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