Instead of re-allocating assets based on previous years’ performance, it is better to diversify your investments. This is generally not a priority for many people. It is advisable to invest in domestic and global equities, debt, directly and real estate through real estate investment trusts, depending on your risk tolerance and investment objectives. Many investment experts have stated that asset allocation plays a major role in the performance of your investments.

Let’s take a look at some simple ways to build long-term wealth.

* Budget tracking by making allocations for expenses considering your needs. You will have to take huge loans for buying a house or studying abroad. But excessive loans can affect your financial trajectory.

* You can enjoy income early in your career. But it should be remembered that retirement life is the category where no loan is normally available. Therefore, you should start investing for retirement as early as possible.

* Try to allocate for health, life and savings insurance sectors. An emergency fund for at least one year’s expenses should also be kept.

* Investing in yourself is also important. This can be done by trying to develop new skills and a variety of skills. This will help you develop a second source of income. This will help you get an edge over others during retirement.

The writer is the Chief Executive Officer of PGIM India Mutual Fund