Asset Allocation: Mitigating Equity Risk with Debt and Gold

The right split changes with age. For a 25-year-old with a long horizon, Agarwal suggests 80% equity, 10% debt and 10% gold. A 45-year-old in peak earning years can shift to 60% equity, 30% debt and 10% gold. A 65-year-old retiree should focus on income and capital preservation, with 20-25% equity, 60-70% debt and 5-10% gold.

Portfolios should be reviewed annually and rebalanced, Agarwal said, to stay aligned with long-term goals rather than short-term market moves.

Gold has gained 15% over the past 12 months, while the Nifty50 is up roughly 8%. The divergence shows why no single asset class works in every cycle. Debt funds have delivered 7-8% annual returns with lower volatility.

A disciplined allocation strategy does not require predicting which asset will perform next. It prepares the portfolio for the range of possible outcomes. Investors who want a custom split should consult a certified financial advisor, Agarwal said.