As ex-servicemen, uncertainty in a combat environment is not something unknown to you. 

This is why the armed forces place such stock in planning for the unknown. However, the famed Field Marshal Von Moltke also said that rarely does a plan survive first contact with a hostile force. 

That hasn’t stopped armies from creating detailed plans. If nothing else, as you must have experienced yourself as a soldier, having a basic plan in place reduces your stress and response time to developments.

This applies to investing too. Proper planning and allocating your investments according to your needs, goals, and income generation capacity is the key to wealth creation.

Rules of engagement in investing

Stock markets, not unlike a battlefield, are by their very nature choppy, and while long term trends suggest an upward trajectory, they can go either up or down in the short to medium term.

In uncertain times, volatility increases and swings are large. Most investors can find this stressful and confusing. In times like these, your asset allocation can contribute to your stress levels or can help with reducing it.

There is an appropriate asset allocation for all of us depending on the life and wealth stage that we are at.

Age-wise asset allocation

To keep it simple, we’ve married asset classes, equity and debt (fixed income) to age appropriateness to get you started.


Your DSOP, PF, AGIF, Gratuity, Leave encashment (If you didn’t reinvest this in equity or real estate), etc are part of this. However, Debt mutual funds should be the fixed income instrument of choice given no lock-in period, low taxes upon withdrawal, and returns that are at least on par with fixed deposits. 

1) If you are invested in liquid funds

Age 35-45: Do nothing to existing investments. This is your emergency fund due to its stable nature, freedom from market movements, and high liquidity. The more uncertain your income, the greater the investment here. If you are a single-income family with kids, at least 12 months of your living expenses should be set aside, accounting for EMIs and school fees. 

Age 50-60: If you retired after a full-service term of 30 years, your DSOP, PF fund, gratuity, etc would normally be enough. You can move a portion of this, where available, to liquid funds due to near similar security but better liquidity.

2) If you are invested in debt funds other than liquid funds, and other government-backed securities

Age 35-45: If you are invested in ultra-short-term and short-term funds, then stay invested and do nothing. Use this for any short-term needs along with your FDs and RDs. 

Age 50-60: It is recommended to be invested in only ultra-short term and short-term debt funds, apart from liquid funds. Your PF and other government-backed investments can remain as is, at this stage. 


Equity is the primary asset class when it comes to building wealth over the long term (7-10 years at least) due to its ability to stay ahead of inflation. The primary ways to invest in this asset class involve direct equity (stocks), ETFs, and equity mutual funds.

Do not withdraw from equity funds unless you have no other sources to meet any urgent and critical requirements. At worst, stop SIPs and use it to fund unplanned but necessary requirements.  

Most long term objectives can be met through investing in large-cap and multi-cap categories. Large-cap mutual funds typically invest in the biggest, and thus the most stable and reliable companies.

Multi-cap funds invest across market capitalisations and thus try to be invested in both today’s stable market leaders and tomorrow’s giants which are minnows now. While volatile, they make up for it in long term growth.

If you are invested in equity mutual funds

Do not withdraw from equity funds unless you have no other sources to meet any urgent and critical requirements. At worst, stop SIPs and use it to fund unplanned but necessary requirements.  

Age 35-45: Stay invested and continue SIPs, especially, if you have chosen large-cap and multi-cap funds.

Age 50-60: You are likely to have enough fixed income now thanks to your DSOP and PF. Your equity portfolio is to ensure your overall retirement corpus stays ahead of inflation. Having at least 30% of your overall money in equity is important to stay ahead of inflation.

In Summary

The idea of a good asset allocation is to make sure occasional underperformance in one asset class (such as equity) doesn’t adversely affect your life and ability to meet your objectives. Solutions such as Scripbox Long Term Wealth or Short Term Money can further help you address your wealth creation needs by removing the problem of choice.

This article was first published in Forcenet magazine