Is your portfolio built to survive a crash? Or is it just built to grow in a bull market?
Most investors choose their asset allocation based on a gut feeling. They pick “80% Equity” because they want high returns, or “50% Gold” because they are scared of the market. But without looking at historical data, these decisions are just guesses.
I built the Wealth Nerve Portfolio Backtester to solve this. Using historical market data from the last decade, this tool allows you to simulate how different combinations of Large Cap Equity (Nifty 50), Gold, and Debt would have performed in the real world.
🧮 The Portfolio Analyzer Tool
Portfolio Analyzer & Backtester
Select your asset allocation to see how â‚ą1,00,000 would have performed over the last 10 years.
đź’ˇ Why This Data Matters (Beyond the Numbers)
As a SEBI-Registered Mutual Fund Distributor with 7 years of experience, I often see portfolios that look good on paper but fail in reality. Why? Because investors focus on Returns (CAGR) but ignore Risk (Volatility).
Here is how to interpret the data this tool gives you:
1. CAGR vs. Absolute Returns
The Compound Annual Growth Rate (CAGR) is the most accurate way to measure growth over time.
- The Insight: A portfolio with 100% Equity might show a high CAGR, but check the consistency. Did it grow smoothly, or did it stall for 3 years?
2. Volatility (The “Sleep” Factor)
Standard Deviation (Volatility) measures how wildly your portfolio swings.
- High Volatility (>15%): Expect your portfolio value to swing drastically. Great for wealth creation over 10+ years, but stressful for short terms.
- Low Volatility (<8%): Stable and steady. Ideal for retirees or short-term goals.
3. Max Drawdown (The Crash Test)
This is the most critical metric. Max Drawdown shows the maximum percentage drop your portfolio suffered from its peak.
- Scenario: During the 2020 Covid crash, a 100% Equity portfolio might have seen a -30% drawdown. If you had invested â‚ą10 Lakhs, it would have temporarily dropped to â‚ą7 Lakhs.
- The Question: Would you have panicked and sold? If yes, you need to add Gold or Debt to cushion the fall.
4. Sharpe Ratio (Efficiency Score)
Are you taking unnecessary risks? The Sharpe Ratio tells you how much return you are getting per unit of risk.
- Higher is Better: A portfolio with a Sharpe Ratio of 1.2 is far superior to one with 0.8, even if the returns are similar. It means you achieved growth with less stress.
📉 Case Studies: 3 Common Strategies
Use the tool above to test these popular allocation strategies:
The “Aggressive Growth” (80% Equity / 20% Gold)
- Who it’s for: Young professionals (25-35 age group) with a long horizon.
- What to expect: High CAGR, but significant drawdowns during market corrections.
The “Balanced Weaver” (50% Equity / 20% Gold / 30% Debt)
- Who it’s for: Investors in their 30s or 40s looking for growth without the heart attacks.
- What to expect: Moderate returns, but the Debt and Gold components significantly reduce the Max Drawdown, protecting capital during crashes.
The “Conservative Shield” (20% Equity / 30% Gold / 50% Debt)
- Who it’s for: Retirees or those saving for a goal 2-3 years away.
- What to expect: Lower volatility. The primary goal here is inflation protection, not aggressive wealth multiplication.
🛠️ Methodology
At Wealth Nerve, we believe in data transparency.
- Equity Data: Based on Nifty 50 historical annual returns.
- Gold Data: Based on domestic gold prices in INR.
- Debt Data: Based on short-to-medium term G-Sec/Bond yields.
- Rebalancing: The calculator assumes the portfolio is rebalanced annually to maintain your target percentages.
🚀 Take the Next Step
Tools are great for planning, but execution is where wealth is made.
Finding the right mutual funds to match these asset classes—and rebalancing them at the right time—requires discipline. As a certified distributor, I help clients build and manage portfolios that align with their personal risk appetite, not just market trends.
Don’t just analyze. Execute.
Frequently Asked Questions
Does this tool guarantee future returns?
No. This is a backtesting tool, which means it looks at historical data (2014–2023). While history often rhymes, it does not repeat exactly. Use this data to understand risk patterns and volatility, not to predict next year’s specific profit.
What index data is used for Equity, Gold, and Debt?
At Wealth Nerve, we use standard benchmarks for accuracy:
- Equity: Nifty 50 TRI (Total Returns Index), representing India’s top 50 companies.
- Gold: Domestic Indian Gold prices (INR/10g).
- Debt: A composite of Short-term Bond Yields and G-Sec proxies to represent a stable debt fund.
What does “Max Drawdown” mean for my money?
Max Drawdown measures the “worst-case scenario” during the testing period. It is the largest percentage drop from a peak to a bottom.
Example: If the tool shows a Max Drawdown of -22%, it means at some point in the last 10 years, a â‚ą1 Lakh investment temporarily dropped to â‚ą78,000 before recovering. This helps you assess if you have the emotional discipline to hold through a crash.
Why is “Rebalancing” important in this calculation?
This tool assumes Annual Rebalancing. If you start with 50% Equity and 50% Gold, and Equity doubles in a year, your portfolio is now skewed. Rebalancing means selling the profit to return to your original 50:50 split. This strategy (selling high, buying low) is key to long-term wealth preservation.
What is a “Good” Sharpe Ratio?
The Sharpe Ratio measures how much return you get for every unit of risk you take.
- > 1.0: Good (Healthy risk-adjusted returns).
- > 1.5: Excellent.
- < 0.5: Poor (High risk for low return).