InvestorQ : Are there are any basic rules that I can follow and adopt when making my Plan-B
Abhi Yadav made post

Are there are any basic rules that I can follow and adopt when making my Plan-B

Abhi Yadav answered.
3 years ago

Firstly, what do you do if your Plan-B clashes with your rule book? The answer is quite simple; just follow the rule book. If your Plan-B suggests that you add more of TCS and your rule-book warns you that you are getting overexposed to the tech sector, just listen to your rule book. In doubt, the rule book should prevail, however intelligent your Plan-B might be.

Secondly, the Plan-B is a lot about detailing and getting into the specifics of the various options and the chances of them happening. Detailing is the key to a Plan-B. Try to envisage as many risks to your buy or sell decision as possible. Look at global factors, geopolitics, oil situation, FII investments, local inflation etc. Practically, you can never have that perfect and foolproof plan. But the more detailed your plan-b, the more effective it is likely to be and the more useful it is going to be when you are actually faced with a necessity to fall back upon your Plan-B.

Finally, remember that Plan-B is relevant for all asset and liability decisions without exception. No, it is not just about equities, but about other asset classes too. If you have bought a debt fund and rates are going down, you need Plan-B. If your home loan has negative equity, you need Plan-B. If you are overexposed to gold, you still need Plan-B as it could create problems when gold prices crash.