The Market Podcast | If you have Rs 5-10 lakh, stick to 50-50% allocation between equity & debt

The market has run up over 40 percent from the lows recorded back in March, but if someone who is under 50 years could look at allocating money towards equity capital in the ratio of 50-50 towards debt and equity, says Viraj Mehta, MD, Equirus PMS in the “Market Podcast’ with Moneycontrol.

Assuming you are under the age of 50 and want to invest Rs 10 lakh as fresh capital – Mehta recommends investors to place 50% of the capital towards equities and 50% towards debt because the valuations are still at comfortable levels.

Within equities, Mehta recommends investors to go overweight on small & midcaps because the broader market has gone through a long phase of consolidation, and a downward trend from January 2018.

Small & Mid-caps were in a bear market for 2.5 years which essentially ended in March. The rally which started in the small & midcap space since March will not stop in 3 months, but the rally is going to be there for the next 3-4 years.

“I advise relatively larger allocation towards small & midcaps, and within that if markets fall 5% then investors can adjust the allocation more towards equities. And, if the fall is more say 20 percent the allocation ratio will change towards 80% towards equities, and 20% in debt,” explains Mehta.

Tune in to the podcast for more.