Arjun, 30, set his portfolio split a year ago — 70% equity, 20% debt, 10% gold — and has not touched it since. Then Dalal Street delivered a six-session rally, capped by a 2,009-point Sensex jump on 5 November 2026. His equity funds look great, and his split is no longer 70/20/10. A rally does not just grow your money; it quietly rewrites your risk. This guide shows how to check your split and put it back.

Quick Answer

Asset allocation is your split across equity, debt and gold — and after a rally it drifts on its own. If equity sits more than 5 points above target, rebalance: move money into debt or gold, or direct new savings to the lagging buckets. Rebalancing keeps the risk you chose, not the risk the market chose.

What asset allocation actually is

Asset allocation is the single biggest decision in a portfolio — bigger than picking any one fund. It answers one question: how much of your money sits in each asset class. Equity grows wealth but swings hard. Debt is steadier and pays interest. Gold behaves differently from both and has hit record prices in 2026 — MCX December gold futures closed at ₹1,44,768 per 10 grams on 5 November. Each asset class has a different job: equity for growth over ten-plus years, debt for stability and money you may need within three years, gold as a diversifier, not a growth engine. When one runs ahead, your portfolio starts doing a different job than the one you hired it for.

The rally moved your split — here is the maths

Take ₹10 lakh at 60% equity, 40% debt and gold — ₹6,00,000 in equity, ₹4,00,000 elsewhere. Now equity rises 20% while the rest stays flat, roughly what a strong rally does to the equity leg. - Equity becomes ₹7,20,000 (₹6,00,000 × 1.20) - The portfolio becomes ₹11,20,000 - Equity is now ₹7,20,000 ÷ ₹11,20,000 = 64.3% of the portfolio Your equity share drifted 4.3 points above target without you buying a single share. To restore 60% you would move ₹48,000 out of equity: 60% of ₹11,20,000 is ₹6,72,000, and ₹7,20,000 − ₹6,72,000 = ₹48,000. That is rebalancing — selling a little of what has risen to buy a little of what has not. It feels wrong because it means trimming winners, but it keeps the portfolio at the risk its owner chose.

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Three ways to pick your split

No single allocation is correct. Here is a framework dated 5 November 2026, with three methods and their weights — use the one that fits you. - 100-minus-age rule (weight 40% — simplest starting point): equity percentage = 100 − your age. At 30, that is 70% equity; at 50, 50%. A rule of thumb, not a law — it ignores income, goals and temperament. - Risk-profile bands (weight 35% — best if your income is uneven): conservative 30–40% equity, balanced 50–60%, aggressive 70–80%. Pick the band you can hold through a 20% fall without panic-selling — the band you can hold beats the one that looks best on paper. - Goal-horizon buckets (weight 25% — best with a clear deadline): money needed within 3 years stays in debt or FDs; 3–7 years splits between debt and balanced funds; after 7 years can carry the most equity. Saving for retirement in 25 years and a house deposit in 2 years needs two different splits, not one. Never copy a split from a headline: two 30-year-olds with different salaries, debts and goals should hold different portfolios.

Arjun's ₹10 lakh over 10 years, worked out

Arjun's 70/20/10 split on ₹10 lakh is ₹7,00,000, ₹2,00,000 and ₹1,00,000. In ten years, at assumed illustrative returns of 11% equity, 6.5% debt and 8% gold, compounded annually — assumptions, not predictions: - Equity: ₹7,00,000 at an assumed 11% becomes ₹19,87,595 - Debt: ₹2,00,000 at an assumed 6.5% becomes ₹3,75,427 - Gold: ₹1,00,000 at an assumed 8% becomes ₹2,15,892 - Total: ₹25,78,915 At an assumed 5% annual inflation, that ₹25,78,915 is worth about ₹15,83,230 in today's money — the honest figure, since nominal growth that only just beats inflation is not wealth creation. The assumed 11% equity return does most of the work: at 8% instead, the total falls to roughly ₹21,00,000. Test your own numbers in the calculator before believing any single scenario.

The 5% drift rule: when to rebalance

Rebalancing every week is noise-chasing; never rebalancing is drifting. A practical rule: check your split once a quarter, and act only when any bucket is more than 5 points from target. Arjun's 4.3-point drift is close to the line — act if next quarter pushes it past 5. Two ways to rebalance, and the cheaper one is often the first: direct new money — your next SIPs or a bonus — into the lagging buckets instead of the winners. The second is selling from the overweight bucket to buy the underweight one; use it when the drift is large or no new money is coming in.

The tax wrinkle most guides skip

Rebalancing inside a taxable account is not free: selling equity funds or gold ETFs can trigger capital gains tax in the year you sell. That does not mean never rebalance — use new money first, rebalance in small steps rather than one large switch, and remember that rebalancing inside EPF, PPF and NPS does not trigger immediate tax the same way, because those accounts have their own rules. On 5 November the Sensex closed at 79,310.01, up 2,008.61 points or 2.6%, and the Nifty at 24,536.60, up 576 or 2.4% — the biggest single-day rally in seven months, with BSE market value at a record ₹501.14 lakh crore. A record market is a reason to check your split, not to chase it higher.

Rebalance this week: 6-step checklist

1. Add up every investment account and write down today's split in percentages. 2. Write your target split next to it. 3. Flag any bucket more than 5 points from target. 4. Run your numbers in the asset allocation calculator above and save the result. 5. Fix the drift with new money first; sell only what new money cannot fix. 6. Set a reminder to re-check in three months, and write down what you changed.
How often should I rebalance my portfolio?
What is the 100-minus-age rule?
Should I rebalance after a big rally?
Does rebalancing inside NPS or PPF trigger tax?

Ready to start?

1. Do this today: add up your investments and write down your current equity, debt and gold percentages. 2. Try your own numbers in the embedded asset allocation calculator on myfinancewisdom.com. 3. Follow @myfwindia on Instagram for the daily checklist version of this guide. 4. Get the myfw app on Google Play — 22+ calculators in your pocket.

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Educational content only — not financial advice. Consult a SEBI-registered investment adviser for personal guidance; investments are subject to market risk.
BSE/NSE closing data, 5 November 2026, via The Hindu BusinessLine and Zee Business: Sensex 79,310.01 (+2,008.61, +2.6%), Nifty 24,536.60 (+576, +2.4%), sixth straight session of gains, BSE market capitalisation record ₹501.14 lakh crore. MCX December gold futures ₹1,44,768 per 10 grams on 5 November 2026, via TradeBrains. RBI repo rate 5.50% (7 October 2026 MPC); AMFI September 2026 SIP inflows ₹32,490 crore, via BusinessLine, 4 November 2026. Worked examples computed by the author; returns are assumed illustrations, not forecasts.