📚 Financial Education Library › Article #22
Published: 2026-06-21 · By Bhanuprakash Sardesai
22. Asset Allocation Strategies for the Indian Investor
Studies have shown for decades that asset allocation — how you divide money between equity, debt, gold and cash — explains more than 90% of a portfolio's long-run return. Stock picking and market timing make better cocktail conversation, but the boring split between asset classes is what actually moves the needle.
The classic rule of thumb is "100 minus your age" in equity. If you're 30, allocate 70% to equity and 30% to debt. At 50, it shifts to 50% equity and 50% debt. This reflects the reality that as you age, you have less time to recover from market downturns.
Within each asset class, further diversification is important. Equity allocation can be split between large-cap (50-60% for stability), mid-cap (20-30% for growth), and small-cap (10-20% for high growth). Debt allocation can include PPF, EPF, debt mutual funds, and fixed deposits.
Rebalancing is the secret sauce of asset allocation. At least once a year, check if your actual allocation has drifted from your target. If equity has run up and now comprises 80% instead of your target 70%, sell some equity and buy debt to restore the balance. You can instantly estimate your future returns using our free online SIP Calculator to model different asset allocation scenarios.
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