Investing: Rishi Nathany

Many of my friends have redeemed their equity mutual fund holding and invested in tax-free bonds. I am also tempted to do so, as I have not made money in the funds I have been invested for in the past four years. And, these bonds are giving nine per cent returns. Please suggest.
One should create their asset allocation based on risk profile and time horizon. This allocation should generally cover all major asset classes, which includes equities and fixed income instruments. Any shift in weightage in the allocation from one asset class to another should only be done after proper deliberation.

On the one hand, near nine per cent a year tax-free interest income does sound very attractive. On the other hand, while equities might not have performed well over recent years does not mean they could not do well going forward.

Historically, in the long term, it has been seen that the return on equities tends to outperform those on fixed income instruments, though equities could be volatile in the shorter term. Therefore, you should make this shift only after considering your investment goals, time horizon and risk profile carefully.

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Today, Rishi Nathany, a certified financial planner, answers your questions