Too Much Equity can hurt your Portfolio

I was going through the Fire_Ind Subreddit where almost all are saying that in last 4 years their portolfio has shoot up and they are much closer to their fire goal. Most of them is thinking of retiring as soon as possible. But actually the problem is equity can hurt your portfolios. In terms last 4 years the equity has given spectacular returns but don't get over confident on the returns.

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Fully on equity can hamper your financial goals. I am seeing more young people are actually more inclined towards equity only portfolio because they think that it can help them reach their financial goals faster. But the problem is when the market starts to crash it can hamper your goals.

In my case I am investing in 20% of my investment as a debt fund because I know that debt fund can give a cushion to my portolfio. And when the market corrects I can invest directly to the equity from debt to get more units. I know I might be losing some money now, but for longer run I am happy that my portfolio can give me 12% returns. If I apply the rule of 72 that means in 6 years my portofio can double and that's good to be honest.

I am not a aggressive investor but at the same time expecting 12% returns is on a conservative side. And this returns I have taken only because I have debt in my portolfio. And that's what I wanted to tell everyone out there mainly the new investors that the equity can hurt your portfolios and it can happen that you might not have money to invest in the equity when the equity is down.

If we see the Corona times, the portfolio was down by 50%, and a lot of people money were stuck and they didn't have extra money to invest at that time.

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