What is your real return?

Asset allocation between equity and debt / gold is touted because it slightly minimizes the portfolio drawdown. And if there is less drawdown, it is psychologically easier to follow through the plan. But, logically for psychological comfort one takes in less return.

One way to visualize and stick to equity is this:

1. Dividend payout (in Rs) of Nifty has never had a drawdown of more than 10%. I evaluated for past 15 years. It is probably the same when extended over longer period.
2. Decently diversified equity portfolio increases its dividend at an approximate rate of 10 to 15%. Nifty has about 10%. Whereas, debt / government securities have zero growth rate of interest income.
3. If you have Nifty 50 as your portfolio or a coffee-can portfolio and live on dividend income. Then it is an extremely stable source of income, even during market crashes and panics (including Global financial crisis, Covid crisis etc.). The only caveat is that you don’t re-shuffle your portfolio a lot.