and income fourth realign your assets to your needs if your portfolio is primarily made up of your luxurious home shares and derivatives you need to rework the mix a part of your wealth should be amenable to being drawn down in instalments to help manage the loss of income or generate adequate income to augment your needs you will need assets that are liquid flexible and less volatile if your optimism for equity led to overweighing it in your portfolio at the cost of debt rebalance it if you invested in a holiday villa and now your job is at risk you need a rethink it is more important to ask which asset will work for you in stead of asking which asset is going to do well in the future if your children are likely to draw the money soon for higher education you may not want to keep the corpus in equity hoping for the next bull run fifth risk is what you can bear not what the market offers the simplest definition of risk appetite in investing is about the downside you can suffer this is both about ability in terms of the wealth that you have and willing ness in terms of your attitude to losses sachin tendulkar and shah rukh khan should also be factoring in risks to their future incomes their accumulated wealth will give them the ability to take risks with their money but their investments should also have a defined downside more so when they know their ability to replenish their wealth would be lower in the future than in the past ensure that you have not taken bets that will cost you your coat sixth asset allocation always works ignore the gurus and pandits who read the crystal ball discount all advice about what the future holds future is but an imagined set of events and can therefore be only about probabilities not certainties give up the eternal search for the next best investing opportunity and stop asking what will work next ensure that your money is put to work across assets and do not indulge in a risky asset beyond your personal capacity for risk a core portfolio comprising your home gold ppf and bank deposits is your base a wealth portfolio consisisting of shares esops mutual funds and bonds is the addon facili tated by your healthy earning good sav ings and sensible investment your speculative positions right from that house you booked for fun to the commodities you traded as pastime is the froth protect the core be sensible with the wealth and cut out the froth your ship might yet sail home to safety weathering the storm