How this plant manager plans to fix gaps in his financial strategy

livemint.com:

After enduring substantial financial losses during the covid-19 pandemic, Gagneesh Kumar, a plant manager from Rudrapur, Uttarakhand, is reassessing his investment strategy as he nears his mid-40s.

Known for his aggressive investments directly in stocks and small- and mid-cap mutual funds, Kumar is now seeking a more balanced and goal-oriented portfolio.

“During the pandemic, my stock portfolio took a significant hit, and some of the stocks never fully recovered. I don't want to face such a situation again as I work towards my long-term goals," Kumar said.

To avoid future challenges, he has sought expert advice to review and adjust his high-risk investments, strengthen his insurance coverage, and align his financial strategy with his family’s long-term goals, including retirement and his daughter’s future.

Kumar’s investment strategy is notably aggressive, with 90% of his portfolio allocated to equities. Of this, nearly one-third is invested in direct stocks. Additionally, one-third of his mutual fund portfolio is allocated to small-cap schemes. The remaining 10% of his portfolio is allocated to debt, primarily through his employee provident fund.

“When we assessed Kumar’s risk profile against his portfolio, we found a mismatch. The portfolio was heavily skewed towards equity and within that high-risk return categories. However, his risk tolerance didn't align with that level of equity exposure," said Suresh Sadagopan, founder of Ladder7 Wealth Planners.

To achieve a more balanced investment approach, Kumar has been advised to diversify his portfolio. The recommended strategy includes allocating 75% to equities, 20% to debt, and the remaining portion to gold through sovereign gold bonds.

Additionally, to build up his