Curate your portfolio like the Great Indian Thali

Think of asset allocation like your diet. Dal chawal is an all-weather staple across India; a low-key hero that never lets you down.

- Radhika Gupta & Niranjan Avasthi

Think of asset allocation like your diet. Dal chawal is an all-weather staple across India; a low-key hero that never lets you down. As a child, whenever I fell sick, my mother would cook up a comforting plate of dal chawal to ensure I stayed nourished and recovered sooner. It has remained at the core of my diet to this day. Similarly, your financial diet will also have a core portfolio. This is the dal chawal of your investments: something that has stood the test of time. Your core portfolio should ideally be built of long-term diversified funds like multicap funds, or large-cap and mid-cap index funds, or broad-based index funds. These are generally simple, timeless ideas that fit for all seasons.

Then comes your satellite portfolio—the chutney and dessert that add excitement and zest to the meal. During the course of your life, you might occasionally embark on exciting adventures like going for a scuba dive or attempting a triathlon. The satellite is like this little adventure: a smaller, dynamic portion of your investments to complement the stability of your core. These comprise the bold, opportunistic assets—sector specific mutual funds and international stocks—that have the potential to offer higher returns but also come with greater volatility. And while a chutney can pack a punch, it is meant to be consumed in moderation and cannot comprise the bulk of your meal. The aggregate of these investments should ideally make up less than 20 per cent of your portfolio.