In the market there is a lot of financial products which gives varied returns. The financial products are of varied returns as well as with varied risks associated with it. If the return is high, the risk is high too whereas is the risk is low the returns is low too.
PC: Pixabay.com
Now the problem is if you go with only high return it's actually a problem because the risk is high and it can be a possibility that you will lose a good amount of money when the bear marlet comes. Similarly if any investment has a low risk investment means you will get very little returns which will not beat the inflation too and thus your money will not grow.
The best is to have a medium risk investment which involves creating a portfolio with a mix of high and low risk portfolio. And thus you will get decent returns. The medium risk percentage will also be different for different people based on their risk appetite and they can invest accordingly.
But the best possible is to have 50% in large cap, 25% in mid cap, 15% in small cap, 5% in gold and the remaining 5% in the debt fund. Now the debt and gold is a low risk low return investment which can give stability to your portfolio. Small cap and mid cap is high risk investment which will give good returns. The large cap is again a normal risk investment which can give a decent return.
When you combine this strategy, you can generate Alpha returns from the index in the long term as well as you will get less volatility and in turns you will have a decent diversified investment. Now you can do annual rebalance and thus keep your investment growing and
