Diversified asset allocation best ploy, says expert

The event organized at the Big Umbrella Preschool and Apple Seeds India activity centre in Mumbai brings together two of the foremost financial advisors - Ajay Bodke of Prabhudas Lilladher and Hemant Rustagi of Wiseinvest Advisors.

A young mother perhaps is at the best stage in life to begin investing because she has such a long time horizon in hand. And it is also a very critical phase because this is when the responsibilities have gone up many fold and they are never coming down.

Below is the edited transcript of the interview with Sumaira Abidi on CNBC-TV18.
 
Abidi: Before we open the floor to our young mothers I want to begin by asking you Ajay that through the series we have met with a lot of communities and we have spoken a lot about how they should be doing things, what are the products they should be choosing. I want to ask you what is it that someone with this risk profile should not be doing?

Bodke: I think someone with your risk profile certainly should look at an asset allocation plan and not put all your eggs in one basket. There is a tendency of being too risk averse at a very young age. As one ages the asset allocation plan also changes. I would suggest having a well rounded diversified asset allocation plan with some money going into a house, followed by some asset allocation towards equities, fixed income securities for a regular source of income and some gold.

Also one needs to rigorously monitor how the asset allocation plan is performing at regular intervals. One of the common pitfalls that many investors tend to have is they don't have an asset allocation and even if they have an asset allocation plan they do not monitor it at all.

These issues need to be kept in mind when one is looking at investing and at a young age one can afford to take slightly higher risks than at an age group which is on the verge of retirement. Hence, an asset allocation plan of a young housewife will differ from a lady who is on the verge of retirement. From that perspective, one should look at asset allocation.

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