Most investors think diversification means spreading money across asset classes like equity, debt, or gold. But according to Chartered Accountant Abhishek Walia, the smartest investors go beyond that—they diversify across timeframes.
“Diversification isn’t just about what you invest in, but when you’ll need that money,” Walia said. “That’s where real financial stability begins.”
He explained that building wealth sustainably means mapping investments to your financial timeline. Think of your portfolio as a staircase, with each step designed for a different time horizon.
Short-term (0–2 years): This is your emergency zone—cash for medical needs, house rent, insurance premiums, or school fees. Liquidity is key here.
Medium-term (2–5 years): Think life milestones—a car purchase, vacation, wedding, or a house down payment. You need growth, but without too much risk.
Long-term (5–20+ years): Retirement, children’s education, and long-term wealth creation. Here’s where equities and compounding shine—if you stay invested.
Walia pointed out that most people don’t struggle because of bad returns—they struggle because of poor liquidity planning. “If you don’t plan for the short and medium term, you’ll be forced to dip into long-term investments,” he said. “That’s when compounding breaks.”
He said having an emergency fund reduces the urge to panic-sell equity during a crash. Proper medium-term planning ensures you don’t break FDs or withdraw from your PPF prematurely.
“When you align your money with your life goals, you stop reacting emotionally to market swings,” Walia said. “Your money has a purpose. And that gives you control.”
His approach, which he calls purpose allocation, is a step beyond traditional asset allocation. It’s about structuring your finances with intention.
In a volatile world, this mindset offers a calm, clear path forward.
“Build your portfolio like a staircase,” he said. “One step for now, one for tomorrow, and one for the future. That’s how wealth is built—not just safely, but sustainably.”
Take someone like Rohan, a 32-year-old marketing professional. He keeps six months’ worth of expenses in a liquid fund for emergencies, uses a recurring deposit for a vacation two years from now, and invests monthly in equity mutual funds for his retirement 25 years away. When markets dipped recently, he didn’t touch his equity funds—his short-term needs were already covered. That’s the power of aligning money with timelines.
Walia added, “Time isn’t just a background factor in investing—it’s the framework. Get that right, and everything else starts to fall into place.”