Portfolio Option 1
The first portfolio strategy focuses on a balanced approach, aiming for stability and modest growth. This portfolio is ideal for individuals with a moderate
risk tolerance who prioritize capital preservation while seeking some returns. It recommends spreading the ₹5 lakh across diverse asset classes. A significant portion can be allocated to index funds, specifically those tracking the S&P 500, which offers exposure to the largest U.S. companies. These funds provide diversification and can track the overall market performance. Additionally, a portion is assigned to bond funds, which can cushion market volatility and provide a steady income stream. A smaller allocation to international stocks further diversifies the portfolio, providing exposure to markets outside the U.S. The allocation percentages will vary according to the investor's specific circumstances, but the general idea is to balance risk and reward.
Portfolio Option 2
The second investment strategy caters to investors with a higher risk appetite, aiming for substantial growth through investments in specific sectors and individual stocks. This portfolio is suitable for those who are comfortable with potentially higher volatility and seek higher returns. The primary focus is on growth stocks, including technology companies and emerging market firms, which can offer exponential returns but also carry higher risks. A significant portion of the ₹5 lakh can be directed towards growth-oriented exchange-traded funds (ETFs) and individual stocks, such as innovative tech companies. Some funds will target specific sectors like healthcare or renewable energy, providing a concentrated approach to investment. This portfolio should also include an allocation to international stocks for global diversification. Given the increased risk, a smaller portion can be allocated to defensive assets like bonds to buffer against market downturns. This approach is designed for those aiming to outpace the market average, aware of the added uncertainties.
Portfolio Option 3
The third strategy offers a passive, diversified investment portfolio suitable for a long-term, ‘buy-and-hold’ strategy. It focuses on broad market exposure with minimal active management. This portfolio targets investors who prefer a hands-off approach and believe in the long-term growth of the U.S. market. The strategy involves allocating the ₹5 lakh primarily to low-cost index funds and ETFs that track the overall market or specific segments, such as small-cap or value stocks. Most of the investment will go into a diversified index fund such as an S&P 500 or a total market index fund. The advantage of index funds is that they offer instant diversification across hundreds of stocks. A smaller portion may be allocated to international stock ETFs to further enhance diversification. Minimal active management is required, allowing investors to benefit from market growth without constant adjustments. This portfolio is a good choice for investors who are comfortable with market fluctuations and who seek simplicity and cost-effectiveness.
