How should I design my fixed-income portfolio after Budget 2024?

Many readers keep asking variants of this question: How should I design my fixed-income portfolio after Budget 2024?The answer is quite simple. Always follow a simple thumb rule: Saving tax is NOT a priority. Diversifying portfolio risk is THE number one priority. This has to be done regardless of tax rules. So we do not change the composition of a portfolio just because tax rules have changed.Fixed income is an essential part of the portfolio regardless of how it is taxed. We will just have to make peace about the tax, accept it and move on.We recommend at least 40% fixed income for goals more than 10 years way initially. This allocation has to be progressively increased as the goal deadline nears. The freefincal robo advisor tool automates this crucial risk management step.These are some illustrations.Note: The funds mentioned in this article are only examples. There should be many other funds which are equally good out there. Readers are urged to dig deeper.Our recommended fixed-income options for goals with deadlines 5Y away or less.Use our quarterly hand-picked list of funds known as Plumb Line for more fund recommendations.Equity allocation: 0%FDs, RDsLiquid FundsMoney Market FundsArbitrage Funds (come with risks, returns not too much).For goals with deadlines more than 5Y away but less than 10Y awayEquity allocation: 0%-25% This is for typical retail investors. Experienced investors or those with higher net worths can take on more risks if they understand them.FDs, RDsLiquid FundsMoney Market FundsArbitrage FundsParag Parikh Conservative Hybrid Fund (this will also satisfy the equity allocation)Edelweiss CRISIL IBX 50:50 Gilt Plus SDL Short Duration Index FundEquity savings funds can be quite risky and not for everyone. See: What you need to know before investing in equity savings fundsOur recommended fixed-income options for long-term goals onlyEquity allocation: 50% – 60% (initially) via index funds.PPF (tax-free)Arbitrage Mutual Funds (taxed like an equity fund, can be used goals more than 1Y away but do not expect much returns). It is more useful for shifting from equity as the goal deadline nears, especially for non-retirement goals.Parag Parikh Conservative Hybrid Fund (taxed like a debt fund)Gilt Funds, Corporate Bond Funds (taxed like a debt fund)Parag Parikh Dynamic Asset Allocation Fund (contains significant equity, not for everyone; do not use unless you have a large corpus or experience; taxed like other funds). See: Budget 2024 Capital Gains Taxation GuideOur overall recommendation is to use simple products for both equity and fixed income rather than hybrid funds. These are for those who appreciate risks or have the money to tolerate shocks.Do share this article with your friends using the buttons below. 🔥Enjoy massive discounts on our courses, robo-advisory tool and exclusive investor circle! 🔥& join our community of 5000+ users! Use our Robo-advisory Tool for a start-to-finish financial plan! ⇐ More than 1,000 investors and advisors use this! New Tool! => Track your mutual funds and stock investments with this Google Sheet! We also publish monthly equity mutual funds, debt and hybrid mutual funds, index funds and ETF screeners and momentum, low-volatility stock screeners.Follow Freefincal on Google NewsSubscribe to the freefincal Youtube Channel.Follow freefincal on WhatsApp Podcast: Let’s Get RICH With PATTU! Every single Indian CAN grow their wealth! Listen to the Let’s Get Rich with Pattu Podcast You can watch podcast episodes on the OfSpin Media Friends YouTube Channel.Let’s Get RICH With PATTU podcast on YouTube. 🔥Now Watch Let’s Get Rich With Pattu தமிழில் (in Tamil)! 🔥Do you have a comment about the above article? Reach out to us on Twitter: @freefincal or @pattufreefincalHave a question? Subscribe to our newsletter using the form below.Hit ‘reply’ to any email from us! We do not offer personalized investment advice. We can write a detailed article without mentioning your name if you have a generic question. Join over 32,000 readers and get free money management solutions delivered to your inbox! Subscribe to get posts via email!About The Author Dr M. Pattabiraman(PhD) is the founder, managing editor and primary author of freefincal. He is an associate professor at the Indian Institute of Technology, Madras. He has over ten years of experience publishing news analysis, research and financial product development. Connect with him via Twitter(X), Linkedin, or YouTube. Pattabiraman has co-authored three print books: (1) You can be rich too with goal-based investing (CNBC TV18) for DIY investors. (2) Gamechanger for young earners. (3) Chinchu Gets a Superpower! for kids. He has also written seven other free e-books on various money management topics. He is a patron and co-founder of “Fee-only India,” an organisation promoting unbiased, commission-free investment advice. Our flagship course! Learn to manage your portfolio like a pro to achieve your goals regardless of market conditions! ⇐ More than 3,000 investors and advisors are part of our exclusive community! Get clarity on how to plan for your goals and achieve the necessary corpus no matter the market condition is!! Watch the first lecture for free!  One-time payment! No recurring fees! Life-long access to videos! Reduce fear, uncertainty and doubt while investing! Learn how to plan for your goals before and after retirement with confidence. Our new course!  Increase your income by getting people to pay for your skills! ⇐ More than 700 salaried employees, entrepreneurs and financial advisors are part of our exclusive community! Learn how to get people to pay for your skills! Whether you are a professional or small business owner who wants more clients via online visibility or a salaried person wanting a side income or passive income, we will show you how to achieve this by showcasing your skills and building a community that trusts and pays you! (watch 1st lecture for free). One-time payment! No recurring fees! Life-long access to videos!    Our new book for kids: “Chinchu Gets a Superpower!” is now available!Both the boy and girl-version covers of “Chinchu Gets a superpower”. Most investor problems can be traced to a lack of informed decision-making. We made bad decisions and money mistakes when we started earning and spent years undoing these mistakes. Why should our children go through the same pain? What is this book about? As parents, what would it be if we had to groom one ability in our children that is key not only to money management and investing but to any aspect of life? My answer: Sound Decision Making. So, in this book, we meet Chinchu, who is about to turn 10. What he wants for his birthday and how his parents plan for it, as well as teaching him several key ideas of decision-making and money management, is the narrative. What readers say!Feedback from a young reader after reading Chinchu gets a Superpower!Must-read book even for adults! This is something that every parent should teach their kids right from their young age. The importance of money management and decision making based on their wants and needs. Very nicely written in simple terms. – Arun. Buy the book: Chinchu gets a superpower for your child! How to profit from content writing: Our new ebook is for those interested in getting side income via content writing. It is available at a 50% discount for Rs. 500 only! Do you want to check if the market is overvalued or undervalued? Use our market valuation tool (it will work with any index!), or get the Tactical Buy/Sell timing tool! We publish monthly mutual fund screeners and momentum, low-volatility stock screeners. About freefincal & its content policy. Freefincal is a News Media Organization dedicated to providing original analysis, reports, reviews and insights on mutual funds, stocks, investing, retirement and personal finance developments. We do so without conflict of interest and bias. Follow us on Google News. Freefincal serves more than three million readers a year (5 million page views) with articles based only on factual information and detailed analysis by its authors. All statements made will be verified with credible and knowledgeable sources before publication. Freefincal does not publish paid articles, promotions, PR, satire or opinions without data. All opinions will be inferences backed by verifiable, reproducible evidence/data. Contact information: letters at freefincal dot com (sponsored posts or paid collaborations will not be entertained) Connect with us on social media Our publicationsYou Can Be Rich Too with Goal-Based Investing Published by CNBC TV18, this book is meant to help you ask the right questions and seek the correct answers, and since it comes with nine online calculators, you can also create custom solutions for your lifestyle! Get it now. Gamechanger: Forget Startups, Join Corporate & Still Live the Rich Life You Want This book is meant for young earners to get their basics right from day one! It will also help you travel to exotic places at a low cost! Get it or gift it to a young earner.Your Ultimate Guide to Travel This is an in-depth dive into vacation planning, finding cheap flights, budget accommodation, what to do when travelling, and how travelling slowly is better financially and psychologically, with links to the web pages and hand-holding at every step. Get the pdf for Rs 300 (instant download)