Building a portfolio is a complex exercise, and its maintenance has to be regular. A person’s portfolio holds different types of assets based on her financial goals, and each asset class gives different types of returns, which is why a portfolio must have an ideal mix of financial products. Too much equity may expose you to undue risk, while being too conservative and investing only in, say, fixed deposits can mean that you are not able to build the corpus that you need. Investment decisions must be taken based on factors such as an individual’s goals, time horizon and risk appetite. Apart from these, one must also keep in mind the volatility risk of the asset class, liquidity, lock-in rules and taxation. What suits one person may not suit another person. In fact, in the scramble to get the highest returns, many people lose sight of their goals.
