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The perfect investment portfolio for Generation Z

The perfect investment portfolio for Generation Z

Some of us tend to compare our career scripts to that of previous generations. We only see the difference in salary level, not knowing that Rs 100 in the 1960s is Rs 8,858 in 2022! (This assumes an inflation rate of 7.5%).

Therefore, using the same old scale to measure the success or effectiveness of an investment is simply wrong. For that reason, Generation Z should consider building their portfolio a little differently than established investors of the past.

Here are some ways Zoomers can create “the perfect portfolio.”

  1. Don’t think only about your future. that also counts

While we are all in a hurry to use the time to build our wealth for the future, keep an eye on the “now.” The role of an emergency fund cannot be overstated. Your emergency fund should be enough to cover your lifestyle for at least six months. And cash is just as important. Fixed deposits (FD) or cash is ideal for building your emergency fund.

  1. Being debt free is really free

If you need to get paid, that should be one of your top priorities.

If you allow that debt to grow as your wealth grows, your wealth accumulation won’t be as significant. Allowing the debt to grow will only force you to pay a larger amount over time.

  1. It’s never too early to start thinking about retirement

Don’t let your peers tell you that retirement planning is an “after-40” job. The sooner you start, the more comfortable your retirement will be. Plus, who’s stopping you from planning your early retirement?

  1. Categorize and prioritize

Accidental investments may not be effective in achieving all of your goals. First, classify your goals according to when they were achieved, such as short-term (less than 10 years), medium-term (10 to 20 years), and long-term (20 years and older). Then prioritize them within those categories so you can find the right investment for each one.

  1. Consistency

We’re sure Gen Z will agree that the brilliance of systematic investment plans, or SIPs, lies in their simplicity. When started early and reinforced with consistent investment, SIPs can prove to be a force multiplier in wealth creation. But without consistent investment, you risk missing out on much of the growth potential of SIPs. Legendary investor Warren Buffett put it well: “We don’t have to be smarter than everyone else; we have to be more disciplined than others.

  1. Five key steps to diversification

It is important to have an asset allocation strategy that can help you diversify well. Your portfolio should contain a combination of these five investment styles:

Quality: stocks that have a high value and are likely to be retained

Value: Undervalued stocks that could gain momentum in the future

Growth at a reasonable price – a combination of the two previous styles. This philosophy suggests investing in companies with good earnings growth potential that are available at reasonable valuations.

Small and Mid-Caps: This is based on evidence that small- and mid-caps have historically outperformed large-caps over the long term.

Global: allows you to geographically diversify your portfolio

Why this strategy?

Historically, such a plan has resulted in a strong long-term annualized outperformance of 4% over the past 10 years compared to the Nifty 50 TRI or Total Returns Index as of July 29, 2022. Furthermore, the drawdowns were much smaller. during significant market dips compared to the Nifty 50 TRI and Nifty 500 TRI.

If you think this is too much, remember that you can never go wrong with a SIP. Start small and build your journey from there.


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