| For a long-term financial goal, equity is necessary to combat inflation |
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Suppose the inflation is (%)
%
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the return you expect from equity, if invested for 10+ years is (%)
%
Do not expect more, assuming past returns were higher.
Note: Expect less, so that you can invest more and be disappointed less!
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the post-tax return from a fixed income instrument for 10+ years is (%)
%
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For a (%)
%
equity exposure and therefore, {{ a.income_exp }}% fixed income exposure.
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The net expected portfolio return is {{ a.portfolio }}%
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Note:
Do not naively assume higer equity allocation implies higher return.
As a simple thumb rule, an equity allocation of X% implies the portfolio is likley to fall at least once from a maximum.
value to a minimumvalue of X%!
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That is, if you have 60% equity allocation, you should be able to accept a fall of about 60% (or more!) if the market crashes.
Since the portfolio needs time to recover from such crashes, it is best to use equity only for long-term goals (10+Y)
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