{"id":10368,"date":"2018-05-01T12:00:44","date_gmt":"2018-05-01T06:30:44","guid":{"rendered":"https:\/\/www.moneyworks4me.com\/investmentshastra\/?p=10368"},"modified":"2020-02-28T14:42:07","modified_gmt":"2020-02-28T09:12:07","slug":"how-to-reshuffle-assets-within-an-asset-class","status":"publish","type":"post","link":"https:\/\/www.moneyworks4me.com\/investmentshastra\/how-to-reshuffle-assets-within-an-asset-class\/","title":{"rendered":"How to Reshuffle Assets within an Asset Class?"},"content":{"rendered":"

To ensure investing successfully to meet your long-term goals,\u00a0you need answers to\u00a0two main questions<\/strong><\/span><\/p>\n

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  1. How much of\u00a0your Investable Surplus do you invest in which Asset classes i.e. Equity, Debt and Gold Asset classes?<\/li>\n
  2. When the market and specific asset prices change, do you stick to asset allocation and asset choices? Or change them?<\/li>\n<\/ol>\n

    Answer to the first question is Asset Allocation and to the second is Re-shuffling.<\/span>\u00a0<\/strong>When the market and some asset prices move significantly, it presents certain opportunities. Therefore, you need to re-shuffle your portfolio\u2015i.e. sell assets that offer a lower risk-adjusted return based on their fundamentals, and buy into new opportunities.<\/p>\n

    Reshuffling\u00a0Direct Stocks<\/span><\/h2>\n

    Let\u2019s understand how to\u00a0reshuffle Direct Stocks<\/strong>. First, ensure only the investment-worthy stocks are held or bought. Then, compare the Future Potential Risk-Adjusted Returns for each stock, and retain the ones which have the highest possibility. For this, you need to assess the fair value of a stock based on its long-term projection, what we call its MRP. We have a process to sell different category stocks at different levels above or at MRP and, similarly to buy them at different levels of discount from their MRP. However, it\u2019s the actual portfolio of an investor that decides whether a stock is actually bought or not.<\/p>\n

    Reshuffling\u00a0Mutual Funds<\/span><\/h2>\n

    For\u00a0Mutual Funds<\/strong><\/span>\u00a0too, select only the best Equity Mutual Funds that have a good Future Potential Upside and will complement your entire portfolio to add meaningful diversification and enhance returns. As a simple example, if you already have adequate Large-cap companies in your portfolio, buy a Mid, Small or Multi-cap Funds that have a good Future Potential Upside.<\/p>\n

    And, suppose if these opportunities are not available today, what\u00a0do you do then? Just wait! Because, in long-term investing, assets must be bought at a reasonable price to earn good risk-adjusted returns.<\/p>\n

    The point is that when you cover multiple assets, you have more options to build a good Wealth-Creating Portfolio than either pure Direct Stock or 100% Mutual Fund portfolios.<\/p>\n

    Watch\u00a0the\u00a0video<\/strong><\/span>\u00a0on this article<\/p>\n