More than 80% of investments of Individuals are in real estate and around 10% in Gold and Silver. The remaining are in financial assets i.e Bank Deposits, Insurance and Mutual Funds etc. Currently the appreciation in real estate prices has stagnated and so also in gold. So physical assets no more  provide better return than the financial assets.In financial assets the equity as an asset class has outperformed  other financial assets. The reduction in the interest rate of Bank Deposits has caused a lot of concern for retired people. Approach by Individual Investors An individual investor should look at the following factors and decide the best combination suiting his /her need. The factors to look are; Safety: Safety of investments is very important for retired people. Any loss of investments will bring difficulties in managing daily expenses. Liquidity: Bank deposits and liquid Mutual Funds are very liquid but provide low return. Too much liquidity assets or too low liquid assets are not desirable. One year’s expenses should be parked in liquid assets. Return: Many investors look at return to decide the instrument. But the return is dependent on volatility (Risk) and time horizon.”The higher the risk, the higher the return” the saying goes. In fact the time horizon and patience to hold the investment brings rewards in equity investment. Taxability The portfolio should be constructed in such a way that the tax burden is minimised. Now taxability is inevitable in any investment (Except EPF and PPF) after the proposal to impose 10% tax on long term equity. It is better to take the help of financial planners and SEBI registered Investment Advisers (RIA) to analyse the implications of tax before making investments Asset allocation The return on investment of each of the asset class may not move in same direction and hence it is advisable to remain diversified. If you face negative return in one asset class, it may get compensated by positive return in another asset class. The greatest investor Warren Buffet says: “Do not put all your eggs in one basket” Risk Profiling The willingness of each individual to take risk varies. All most everyone wants to gain in the market but many have aversion for loss. The market is uncertain and one can aim to gain only when one is willing to take risk. Further there is another dimension to risk .i.e. ability to take risk. Someone starting his career and without dependents can take higher risk but one who has retired and have limited corpus cannot take risk since in the event of market going down, the hard earned money will be lost. Need to take risk The financial planners take the considered view on risk taking by judging whether there is a need to take risk. If the financial goals can be achieved without taking any risk, the planner may recommend higher debt allocation. But if the goals can be achieved only with higher return, the planners consider exposures to equity having consideration to goal horizon. Analogy If you want to walk 5 kms in the morning, go by foot or cycle; if you want to travel 100 kms, use car or bus; If you want to travel 500 kms, use train, if you want to travel 1000km;use aeroplane. Similarly for emergency, use liquid mutual fund; for one year, use debt, for 3-5 year use balanced fund and for more than 5 years use diversified equity fund. Portfolio strategies Strategic allocation: The saying goes “100 minus your age is your equity allocation”.It is simplistic to understand .For a 30 year old, 70% should be in  equity. Tactical Allocation: The continued reforms in India and macroeconomic stability  provides long term opportunity and hence a little higher allocation to equity. Rupee cost averaging SIPs (Systematic Investment Plans) helps in mitigating volatility risk of the market.It is gathering momentum. Similar strategies are STP (For Lump sum Investments)and SWP(Similar to periodic Pensions). Products The Direct Mutual Funds are emerging as a transparent and client centric instrument since there are no embedded commissions in it.The investors can save upto 1-1.5% commission.The SEBI Registered Investment Advisers are offering these Mutual Funds. Review and Monitoring The review and monitoring of portfolio are a must now a days since the market is volatile. Further the credit default risk and interest rate risk has impacted the fixed income securities.