Photo by Anna Tarazevich

It’s time to say Happy New Year – wishing you the best in 2026!

Despite the celebration that invariably ensues – worldwide – to mark the change in the calendar year, a new calendar year, is actually a change that bears no practical significance for our lives. 

The Earth’s rotation remains the same, there are no seasonal changes, atmospheric impact is unchanged, cultural, economic, financial and our personal lives move on the 1^st of January each year, no different than they did on the 31^st of December. 

The human mind, however, feels excited by change that promises a new beginning; a new calendar year brings precisely that excitement and expectation into all our lives. This ‘new beginning’ is also unprejudiced – it shows up in the same way regardless of who you are and where you are. It’s a collective excitement that is hard to brush away. 

One aspect of your life which can utilise this excitement at the start of a new year very productively, is your financial health. This is a good time to sit down, rethink, reassess, reset and recalibrate your financial objectives, savings and your investmentAn investment is made to give you a return. You make an investment if you use your money to buy either physical assets like property or financial assets like bonds and equity with an aim to receive income or gains... More efficiency. 

By that I mean, take a re-look at your asset allocationAsset allocation is essentially an official term for what you intuitively know is a healthy investment practice. For starters most households are likely to own some property and gold. That is diversification in asset allocation. You allocate the money you... More in alignment with your money goals. 

What happened in 2025?

Last year had a surprising outcome with precious metals rallying way beyond expectations, perhaps in reaction to what can only be seen as fragile and whimsical global leadership. Gold prices were up around 70%-75% in 2025; while several experts spoke about a breakout rally in gold, this level of price rise was not predictable. At the same time, domestic equity market did not deliver in 2025. It was a year that shone the spotlight on the wisdom of having a suitable asset allocationAsset allocation is essentially an official term for what you intuitively know is a healthy investment practice. For starters most households are likely to own some property and gold. That is diversification in asset allocation. You allocate the money you... More in place. 

Investing only in domestic equity assets in 2025 would have resulted in a benign portfolio return for the year. Whereas, mixing in a bit of fixed income investments and gold would have not only cushioned the equity volatility but also delivered superior returns. 

The other theme that stood out last year was the depreciating INR. Which went from around Rs 85 per USD at the start of the year to almost Rs 90 per USD by the end. Which means the INR lost nearly 6% value against the dollar. This also means that investments made by Indians in overseas assets would have delivered relatively better returns. 

If you didn’t have any gold or overseas stocks in your portfolio, you may be feeling the pangs of missing out on the respective price rallies. 

But as discussed earlier on, this is about the new year! New beginnings mean that you do not fret over the past, what’s missed is gone. 

What now, in 2026?

Experts are predicting an optimistic 12%-14% return from Nifty 50 in 2026 and some are talking about a more reasonable 8%-10%. At the same time, the rally is gold is expected to continue, albeit at a slower pace. Give the rate cuts, fixed income stable return may be slightly lower in 2026. Lastly, overseas equity, specifically US stock market may also be looking at early double digit returns, say experts. 

Ideally, you needn’t get into the details of this and start with mapping out your current asset allocationAsset allocation is essentially an official term for what you intuitively know is a healthy investment practice. For starters most households are likely to own some property and gold. That is diversification in asset allocation. You allocate the money you... More, if you haven’t already.

Step one would be to write down the market value of all your assets and then see what proportion of your total investments, these are. 

Step two is to rationalise the allocation. Remember that regardless of the returns in the last year, assets in your portfolio are there for a particular role. For example, we know that equity creates long term wealth provided you pick good quality and remain invested through the cycles. You cannot expect equity to deliver every year. Fixed return investments, cushion the volatility and gold is a hedge to uncertainty. Overseas equity helps you diverse out of your home country risk. 

If you have long term wealth creation goals and the appetite to stomach the near term equity volatility, your portfolio can be aggressively titled towards this asset. Which means having 70%-80% of your money invested in equity. Is that the case now? If not, build towards it or if you are in excess, cut back. 

Why not 100% equity, because a cushion from fixed return assets and gold will help you smoothen out your annual portfolio return without taking away from your long term wealth creation goal. However, keep in mind that a cushion is just that, a small part of the seat not your entire allocation. 

None of the experts, even those who are very bullish on gold prices going forward, recommend adding more than 10%-15% of your portfolio in this commodity. The reason is that gold prices too are volatile and for periods which are way longer than what equity market volatility witnesses. Moreover, gold returns are purely price based, there is no additional income like dividend, interest or rent. 

Lastly, put aside in low risk fixed income assets like deposits or short term debt funds an amount that you can lean on for your extra spends and emergencies. That would mean keeping aside roughly 9-12 months’ worth of non-negotiable expenses in these investments. If you haven’t done so already, build it up over time, gradually – while also continuing your regular equity investments. 

Yes, you see it right, the formula doesn’t change. In 2026, you must readjust to asset allocationAsset allocation is essentially an official term for what you intuitively know is a healthy investment practice. For starters most households are likely to own some property and gold. That is diversification in asset allocation. You allocate the money you... More if you were more of an extreme investor and keep up your status quo if you were wiser to have a balanced portfolio. 

It’s not rocket science, it’s simply good discipline. More than asset prices, your behaviour will determine what your portfolio earns by the end of this calendar year.