One month is too short a period to evaluate an investment strategy, especially if it has been designed with a longterm perspective. Yet, the volatility witnessed in the markets in the past one month, following the European crisis, has validated an important facet of the Money Today-Value Research Lifestage Model Portfolios—systematic investment plans (SIPs) are, by far, the best way to invest in equities and equity funds. The investment in the portfolios is made through SIPs of Rs 5,000 each on the first day of every month. On the same day, units worth Rs 5,000 are redeemed from the fourth portfolio.
We have always maintained that patience and discipline are the twin keys to long-term wealth creation. Analysts expect markets to correct significantly if the European situation worsens. One might feel tempted to increase the allocation to equities if the Nifty drops to below 4,500. However, it is not advisable to tweak the allocation on a monthly or quarterly basis. The fund manager plans to do this once a year and that, too, only to rebalance.
From next month, we shall analyse one of the model portfolios. We shall look at its asset allocation, the stocks and sectors it has invested in, and how it performed vis-à-vis the broader market.
