Please suggest me on my portfolio allocation

Please suggest me on my portfolio allocation

Sr.No. Scripts Allocation (%)
1 Larsen 11.61
2 Axis 10.14
3 LIC 7.61
4 SBI 6.89
5 Sun Pharma 6.99
6 Reliance 6.05
7 Coal India 5.12
8 PTC 5.55
9 ICICI 7.36
10 KEC 3.67
11 SRTRANSFIN 3.62
12 CROMPGREAV 5.98
13 GMRINFRA 2.26
14 NDL 3.62
15 Tata Steel 3.83
16 TATAGLOBAL 4.89
17 IDFC 3.10
18 JAYBARMARU 1.68

 

You have too many stocks in your portfolio. If your portfolio size is above 5 lacs + you must never ever diversify into so many stocks. Any stock must not be greater than 8% in your portfolio. that makes it max of 12 stocks with remaining being in Cash.

 

@MoneyWorks4ME @RAMA MURTHY SASTRY CHALLA @Srouta Mukherjee

Based on the current volatile market, what is the best practice to invest, if I have 5 lacs in cash and would like to build a portfolio?

Should I start investing in stocks monthly as SIP or lumpsum? approx 2 stocks per month.

End of the first year with 24 stocks, should I then filter based on stocks performance reduce it to 12 stocks?

 

@Sonia
dont invest in lumpsum .... portfolios are not build in a single day
slowly infuse money and build portfolio ...portfolio size is depend on investor abilities and management
skills ...
why should enter 24 stocks and after that reduced to 12 stocks ...

first analyze and fix your manageable number 12 or 18 or 24
fix it and after that select sectors ...then select stocks ....
then stock allocation amount .....
always maintain " minimum 15 -20 % cash " with you ....

 

@RAMA MURTHY SASTRY CHALLA

Thanks for your kind advise; actually the stock advisory will release 2 stocks monthly i.e. Hidden gem & value pick, so end of the year I will have 24stocks. Planning to invest monthly 20k in two stocks. does it make sense? So 2nd year based on performance will build portfolio to 12 stocks?

 

Can you explain the reasoning behind it? Are you proposing an equitable distribution of portfolio if so why?

 

Mr. Chala, can you throw more light on the 15%-20% cash component? for a 5 lakh protfolio around one lakh would be in cash, don't you think that is a little too much?

 

@RAMA MURTHY SASTRY CHALLA @Srouta Mukherjee

Is it true at any point of time you cannot invest in a "single stock" more than 8% of our total equity portfolio?
If I have allocated 8% to a stock initially I cannot invest more than 8% even if I plan to hold it for 5 years?

 

one or half percent no problem sonia , it is not strict thumb rule ,it may vary investor to investor based on experience and knowledge , but common small investor not taking risk if it is just like a " satyam computers case" portfolio will not recover in short to medium term , our investment base is financial numbers
or news other sources , we saw satyam ficticias reserves case so we can not believe annual reports 100 % with this experience ... if we have full conviction on that stock and you are a high risk apatite investor you may invest up to 10 %
In my view always capital protection is investors primary duty ....

 

@RAMA MURTHY SASTRY CHALLA

Thanks, but need an example for better understanding. If I have 4 lakhs cash in hand and I am investing in
1 smallcap and 1 midcap stock.

1) How much % allocate to these two stocks? I understand that from the allocated amount i will invest 70% initially and 30% on correction.

2) Equity portfolio is made with cash in hand + future earnings or only with existing cash, because the allocated % would keep changing..

 

@Hakish ji
cash position is depend up on market position and based on experience and knowledge .... it is vary one person to another , every investor will decide that with his/her convenience

 

@Sonia , In my view for beginners or less experience persons may confined to " Large cap stocks"
after some experience slowly start invest in Mid cap stocks and after that small cap stocks investment
in my view for small cap stocks 15 % - 20 % of capital amount is maximum for average knowledge investor

mid cap stocks 20 % - 25 %
Large cap Stocks 30 % - 40 %
cash position 10 % - 15 % at any time minimum

but always remember invest slowly in corrections ...portfolios are not build in a single day
these are for avg. knowledge and experience investor it is not a fixed thumb rule for all
it may be change

 

Always better to keep discipline. Keep ceiling of 5% for each stock so that even if there is 100% loss in stock impact on portfolio is only 5%.