Don’t Leave Your Star Asset alone

The recent arrest of Delhi chief minister Arvind Kejriwal has literally been the talk of the town. But this has also led to some discussion about how the government will work efficiently in the absence of the CM.

The Delhi government sought to dispel such ‘rumours’ through a notification, issued days after the CM’s arrest and post two orders he issued from prison, to clarify that welfare schemes and subsidies will continue as before. “...it merits clarification that administration of schemes and governance are never specific to individuals and shall continue in normal course, as in the past,” it said. “There is an architecture of civil services and processes laid down in the National Capital Territory of Delhi, which continue as usual,” it added.

While Kejriwal continues to be the biggest asset for the Aam Aadmi Party (AAP), the fact that he put certain processes in place along with the already existing and organised bureaucratic machinery, clearly highlights that multiple aspects have to come together to ensure the smooth functioning of a government.

There is a learning for investors here, even if it may sound far-fetched to some. Not depending on the Kejriwal (read equities) of your portfolio can come handy when that asset faces trouble. So even if equities are the star component of your portfolio, it makes sense to allocate responsibility to other assets. That will ensure that if equities face trouble, assets such as debt, gold and real estate can rise to the occasion and tide over tough times. Just like a government, different aspects have to come together in a planned manner to ensure the portfolio growth is smooth and in line with your goals.

The stock markets are on a roller coaster now, and with the Reserve Bank of India (RBI) expected to cut interest rates later this year as inflationary pressures reduce, there is a case for buying debt funds. Accumulating units now to benefit from the rate cut later is a strategy that you could consider.

As we enter the new financial year, this is a good opportunity to review your allocation to different assets and realign them with your financial goals. Make it an annual exercise, if not six-monthly, and your portfolio will be sorted to a large extent. Some amount of strategic planning can always come in handy as market and economic factors change constantly, and asset allocation can be your biggest friend when you are planning for your future.