Your SIPs alone won’t save you - Here’s how to survive the next market crash

With global markets bracing for potential downturns in 2025, investors with equity-heavy portfolios are being advised to rethink their asset allocation strategies. One such investor, a 38-year-old high-earning salaried professional with a family of three, shared concerns about managing risk in the event of a market crash.

The individual currently holds 75% of his assets in equities, 20% in provident fund (PF), and 5% in gold. Over the past decade, he has consistently invested 80% of his Rs 1 crore annual income into equities while keeping his monthly expenses within Rs 1.5 lakh — which includes rent, international travel, and future schooling for his 5-month-old son.

While this disciplined approach has built a strong equity corpus, the investor is now looking to rebalance amid fears of a market correction.

"High allocation to equity creates diversification risk that should be addressed," said Akhil Rathi, Senior Vice President, Financial Concierge at 1 Finance. “Market downturns can test an investor's patience, but they also offer opportunities for systematic investors.”

Rathi noted that while SIPs help investors acquire more units during a dip, reducing equity concentration is crucial for long-term stability. He suggested shifting some exposure to gold and debt instruments — two traditional safe havens during uncertain times.

“Gold provides a hedge against inflation and economic volatility,” Rathi said. Instruments like Sovereign Gold Bonds (SGBs) and Gold ETFs can be used to increase gold allocation gradually without excessive liquidity risk.

Debt mutual funds also offer a reliable alternative, especially for those seeking capital preservation with lower volatility. “By reallocating a portion of your SIPs into high-quality debt funds, you can create a buffer against downturns without sacrificing long-term growth,” he added. A suggested shift of 20% from equities into a mix of gold and debt could significantly improve portfolio balance.

Beyond asset classes, aligning investments with life goals remains essential. Given the investor’s upcoming expenses — including child education — diversifying now ensures future financial milestones remain on track regardless of market performance.

“Equity remains essential for long-term wealth creation, but resilience comes from diversification. A balanced mix of equity, gold, and debt is the key to navigating volatility without derailing financial goals,” Rathi concluded.