Foremost, the investments should be in tune with the investors' risk appetite. This is one area where, what is right for one investor need not be right for another. What is an ideal portfolio for one set of individuals could be grossly inappropriate for another.

Secondly investments should act as a stepping stone towards achieving the various goals that investors should have set for themselves.

Investors have a plethora of options available to them ranging from mutual funds, equities to fixed income instruments like bonds and bank deposits. An ideal portfolio should have a judicious mix of all these instruments in the right proportions. The investors' age can be used as a benchmark to determine the nature of the portfolio.

Broadly speaking investors in the higher age bracket have a lower risk appetite and vice-versa. Investors' diverse risk profiles should be mirrored in their portfolios as well. We present a grid of what ideal portfolios should look like for various age groups. At the outset we would like to state that these portfolios are purely indicative in nature; however they can be used as points of reference to gauge what your portfolios should look like and make necessary adjustments if required.

If you are below 30 years of age
If you fall in the less than 30 years age bracket, you have age and time on your side. Ideally you have a very long investment horizon and should also possess the highest risk taking ability. Theoretically equities is the place to be since studies have proven that over longer time periods, equities have the ability to outperform comparable asset classes like gold, property and bonds.

Also equities posses the ability to counter inflation giving them an edge over assured return instruments like bank deposits. Having stated the prowess of equities, lets not forget that investing directly in equities may not be everyone's cup of tea; hence the mutual fund route is advisable for retail investors.

Mutual funds offer investors the opportunity to be invested in the markets using expert advice, thereby shifting the onus largely to the fund manager and the asset management company.

Well-managed mutual fund schemes have consistently managed to outperform benchmark indices like the Sensex and Nifty. This contention is authenticated by the performance data of leading mutual fund schemes especially over the longer periods (more than 5 years).

At this stage, 45-55 per cent of the investors' portfolio should be invested in diversified equity funds. Similarly 25-35 per cent of the corpus should be reserved for balanced funds which provide exposure to both equity as well as debt.

Monthly income plans, which invest a small portion of their corpus in equities should account for 1-5 per cent of the holding. Investors should consider opting for some of the aggressive schemes among the hybrids i.e. balanced funds and MIPs.

If you have an informed view on the markets, investing a small portion in sector-specific funds should not be ruled out. Since investors are building a corpus for their future needs and with time on hand the aggressive variety can prove to be a smart choice.

Debt funds of the floating rate and high-yield type (high yield funds invest in low-rated paper) should form 1-5 per cent of the portfolio size. These investments can help you counter volatility in the debt markets and provide a certain degree of stability to your holdings.

The fixed income component should account for 5-15 per cent of your investments. Schemes like the PPF and Kisan Vikas Patra that run over longer time periods should be considered at this point since liquidity may not be a high priority.

If you are between 30-45 years
At this stage there is likely to be a significant change in your responsibilities, needs and risk appetite. You could have a family to provide for, additional duties to shoulder and your risk appetite would have diminished as well. These changes should be reflected in your portfolio.

The portfolio's exposure to equity funds should be reduced to around 35-45 per cent, while that to balanced funds can be retained at 25-35 per cent. MIPs with their bias in favour of debt should account for a larger portion around 10-20 per cent.

Debt funds should account for the same portion as earlier i.e. 1-5 per cent, as is the case with fixed income investments at 5-15 per cent. The augmented stake in MIPs will ensure that your portfolio's bias towards debt increases, despite retaining a sufficient stake in equities to provide growth. The above mentioned portfolio will give you an exposure of around 60 per cent in favour of equity that will help you strike a balance between growth and safety.

If you are between 45-55 years
Priorities for individuals in the 45-55 age group can be radically different from those for other age groups. Although you may not be retired at this stage, it's probably on your mind. Your risk appetite is likely to be on the conservative side and safety in investments should be granted more priority vis-ŕ-vis returns.

Investments in both equity and balanced funds should be cut down to just 20-30 per cent of the corpus. This is keeping in line with the lower risk appetite. Investments in MIPs should be further hiked to form nearly 20-30 per cent of the entire corpus.

Fixed income instruments should occupy 15-25 per cent of your portfolio. Liquidity assumes importance at this stage and the same should be reflected in your choice of investments.

Post Office Time Deposits and bank deposits which are shorter in tenure plus offer regular returns should be considered. Similarly instruments like the Kisan Vikas Patra can be considered despite their longer tenure because of the premature encashment option as compared to the NSC which comes with a lower tenure but no exit clause.

If you are above 55 years of age
Its consolidation time. You are probably retired and are more dependent on your investments than ever before. Your risk appetite could have touched rock bottom and safety ranks the highest. Equity funds, which accounted for a substantial chunk of your portfolio in your younger days, must now play a minor role.

Investments in equity funds and debt funds alike should be curtailed to the range of 1-5 per cent each. Similarly your stake in balanced funds must be slashed to 5-15 per cent of your total corpus. While selecting equity funds pay special attention to the management style and portfolio.

Opt for conservatively managed funds that have well-spread portfolios to minimise the possibility of capital erosion. Similarly look for balanced funds that rigidly maintain a 55-60 per cent cap on the equity component of their portfolio. MIPs and fixed income instruments should account for 35-45 per cent each of entire investments.

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The Retirement Planning Centre

Within the domain of assured return schemes, individuals in this age bracket can participate in schemes reserved for senior citizens like the soon to be launched Senior Citizens Savings Schemes.

Similarly fixed deposits with financial institutions and banks should be invested in as the additional rate (generally 0.5 per cent) for senior citizens can make them an attractive choice. Ensure that your investments are secure e.g. invest in deposits with AAA ratings and steer clear of company deposits.

Maintain the strategy of investing in bank deposits with a lower tenure to fulfill your need for liquidity. Regular income will be of high importance, the need can be satisfied by schemes like the Post Office Monthly Income Scheme and the interest payment option under the 8 per cent Savings (Taxable) Bonds.

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