Risk tolerance is the emotional tolerance to risk, says Vivek Banka of GoalTeller

livemint.com:

Investors should not sway their portfolio basis specific events and should stick to diversified funds for the majority of their portfolio. For risky thematic or sectoral bets, they can set aside 10-20% of their equity portfolio as tactical bets, says Vivek Banka, Co-founder, GoalTeller.

In an interview with MintGenie, Banka said that for investors in lower tax slabs, debt funds continue to be the best bet from a risk-return perspective where one can look at a return of around 7-7.5% annually with fairly low levels of credit risks.

For high tax slab investors, debt funds might not be the best vehicle as both yields and taxation are unattractive. Despite the positive view on inflation and interest rates, we believe that there is only as much that interest rates can decline from current levels.

However, debt funds continue to be the best bet for investors in lower tax slabs from a risk-return perspective where one can look at a return of around 7-7.5% annually with fairly low levels of credit risks. For high-tax slab individuals, arbitrage funds, selective corporate bonds, and equity savings funds can be good choices. 

The interim budget was fairly non-eventful on the negative side, however few sectors that should continue to do well are PSUs and capital goods amongst others. One defining aspect of this budget was the government’s resolve to be fiscally very prudent and continue improving the balance sheet which bodes very well for interest rates and makes India very attractive for foreign debt inflows. This should have a positive bearing on all sectors that benefit from lower interest rates like banks, real estate, and even debt-heavy sectors that will be helped by lower interest costs. 

Having said this, investors should