Are you prepared for the perfect storm coming our way ?

Rahul Shah
If he depends to a large degree on his capital for managing his expenses then he should have a mix of both stocks as well as bonds in his portfolio.
Every time the stock portion goes up significantly, he should sell some and put the money in bonds. Likewise, if the stock market falls a great deal, he should take money out of bonds and put it into stocks. This rule will allow him to take more exposure to stocks when the stock market is down and reduce exposure after the stock market has gone up. I can't emphasise enough how this simple rule allows an investor to do the right thing from a long-term perspective. Also, most people end up doing exactly the opposite in the stock market right now. With legendary investors like Warren Buffet, Elon Musk, and Peter Thiel pouring in billions of dollars all over...Would You Really Want to Miss It? You see, bonds are not the best defence against inflation. Hence, you needs to have stocks in your portfolio. But even stocks cannot protect you against inflation if you buy them when the market is trading at expensive valuations. So you need bonds to park your gains from stocks and you need stocks to beat inflation over the long term.
So far so good.
But what if you don't depend on your capital for managing your day-to-day expenses. What if you are still years away from retirement. Well, in that case, a systematic investment plan or an SIP, mostly in stocks, is your best bet. As you are not dependent on your capital, you don't have to tap into your investments and sell them at an inopportune time. You can let it be and allow the magic of compounding to do its work. To conclude, a perfect storm in the form of inflation and a stock market crash may or may not be headed our way. We will be happy if these events don't occur. But even if they do, the action plan we just discussed can come in handy. It's simple but highly effective.