Skip to main content

Simple Measures In Difficult investment Times

The Five Questions You Need To Ask The Advisor, Or Yourself, That Will Help You Tread Over Current Uncertainties 

The present year has been a roller coaster ride for investors. Equity markets are turning more volatile each day. Within the first two months, the Sensex has moved between 17,200 and 20,500. There seems to be no respite from this, as oil prices are moving up due to unrest in the Arab world. They recently touched $120 a barrel, a 30-month high.

Commodities and debt are on an upward spiral. Gold and silver made lifetime highs by crossing the `21,000 per 10 grams and `50,000 a kilogram. State Bank of India recently launched high coupon 10-year (9.75 per cent) and 15-year (9.3 per cent) bonds. There are expectations that interest rates could inch up further. This means that interest rates on loans will go up as well.

Real estate prices though stagnant are still high. To make matters worse, Reserve Bank of India (RBI) has made it mandatory for banks to lend only up to 80 per cent of the house value. This has made homes beyond reach of many individuals.

If you are fretting about your goals in the present environment, you are not the only one. Many investors are worried about the future. Obviously, a person cannot fulfil goals on debt or commodities that are not tax efficient. In addition, they may even correct if government take corrective actions or geopolitical situation change.

If you have a financial advisor taking care of financial matters, or even if you manage your own finances, answer these five questions. They may put you at ease.

What should I do now?

This depends on what your needs and goals are. It is important that your advisor takes stock of your needs first and crafts out an action plan accordingly. There can be various needs and goals for which you might require money after six months, two years, five years and 25 years. Your investment strategy for each of these should be different.

Does my portfolio need rebalancing?

 This stems from the classic theory of buying low and selling high. Assets that have done well can be sold off, whereas assets that are correcting can be bought. This means that if you had made a real estate investment three-five years back and are sitting on decent gains this might be the time for profit booking. Similarly, if your gold allocation has gone up, sell gold and buy equity. In the current environment, you just cannot ignore debt. A person can increase allocation to it but after considering post-tax returns and inflation.

When do I invest?

Volatility can present excellent opportunities in the stock market for long-term wealth creation. However, the daily gyrations of the stock market can make an investor nervous. There are expectations that Sensex can further correct to 16,800-level, or even lower. However, correcting markets and falling prices present opportunities to make abnormal returns over a time. One should, hence, start buying in a staggered way on every dip, as there is no precise way of knowing where the bottom could be. True the prices could still go lower after you have exhausted your cash, but this is exactly how equity markets work. People who have missed out investing in 2008 and 2009 could probably get great opportunities in the near future.

Should I book profit on realty?

The answer to this depends on your situation. If you have made property investments long time ago, this could be a great time to sell. However, if you need a place to stay, then buying at atrocious rates today will do no good. Instead, a better strategy is to rent out. Pockets where there is an oversupply of ready properties and under-construction ones should be avoided. At the same time good locations where prices are still reasonable, have under construction properties of reputed builders can be considered as investments if the price is right. There will be pressure on many builders to clear off inventory in the next few months. So, it is likely that there will be price correction in the near future.

Gold and silver strategy?

 

 Finally what should my gold and silver strategy be? It should be in line with your asset allocation. Here too, invest in staggered way. The prices of these commodities are at lifetime highs and there can be sharp corrections in prices. Despite all-time high prices, metals can still surprise investors. A prudent strategy, therefore, would be to invest regularly in such investments.

Popular posts from this blog

National Savings Certificate

National Savings Certificate Here's everything you need to know about the 5-year savings scheme offered by the Government This is a 5-year small savings scheme of the government. From 1 July 2016, a National Savings Certificate (NSC) can be held in the electronic mode too. Physical pre-printed NSC certificates have been discontinued and replaced with Public Provident Fund-like passbooks. What's on offer The minimum amount you can invest in them is Rs100 and there is no upper limit. Under this scheme, all deposits up to Rs1.5 lakh qualify for deduction under section 80C of the Income-tax Act, 1961. The interest earned is taxable. You can invest in multiples of Rs 100. These certificates can be owned individually, jointly and also on behalf of minors. The interest rates for all small savings schemes are released on a quarterly basis. The effective rate for NSC from 1 October to 31 December is 8%. The interest is calculated on an annual compounding basis and is given along w...

Am you Required to E-file Tax Return?

Download Tax Saving Mutual Fund Application Forms Invest In Tax Saving Mutual Funds Online Buy Gold Mutual Funds Leave a missed Call on 94 8300 8300   Am I Required to 'E-file' My Return? Yes, under the law you are required to e-file your return if your income for the year is Rs. 500,000 or more. Even if you are not required to e-file your return, it is advisable to do so for the following benefits: i) E-filing is environment friendly. ii) E-filing ensures certain validations before the return is filed. Therefore, e-returns are more accurate than the paper returns. iii) E-returns are processed faster than the paper returns. iv) E-filing can be done from the comfort of home/office and you do not have to stand in queue to e-file. v) E-returns can be accessed anytime from the tax department's e-filing portal. For further information contact Prajna Capit...

Mutual Fund Review: HDFC Index Sensex Plus

  In terms of size, HDFC Index Sensex Plus may be one of the smallest offerings from the HDFC stable. But that has not dampened its show, which has beaten the Sensex by a mile in overall returns   HDFC Index Sensex Plus is a passively managed diversified equity scheme with Sensex as its benchmark index. The fund also invests a small proportion of its equity portfolio in non-Sensex scrips. The scheme cannot boast of an impressive size and is one of the smallest in the HDFC basket with assets under management (AUM) of less than 60 crore. PERFORMANCE: Being passively managed and portfolio aligned to that of the benchmark, the performance of the index fund is expected to follow that of the benchmark and in this respect, it has not disappointed investors. Since its launch in July 2002, the fund has outperformed Sensex in overall returns by good margins.    While every 1,000 invested in HDFC Index Sensex Plus in July 2002 is worth 6,130 now, a similar amount invested in Sensex then wo...

Different types of Mutual Funds

You may not be comfortable investing in the stock market. It might not seem like your cup of tea. But you can start by investing in Mutual Funds. Many first-time investors invest in Mutual Funds. This is because they do not know how to invest in individual securities. Basic information on Mutual Funds People invest their money in stocks, bonds, and other securities through Mutual Funds. Each Fund has different schemes with specific objectives. Professional Fund Managers look after these schemes. Your Fund Manager could help you invest in a scheme that suits your financial goal. Functioning of Mutual Funds You could make money through Mutual Funds in different ways. A single Mutual Fund could hold many different stocks, bonds, and debentures. This minimizes the risk by spreading out your investment. You could earn dividends from stocks and interest from bonds. You could also earn capital by selling securities when their price increases. Usually, you could choose to sell your share any t...

IDFC - Long term infrastructure bonds - Tranche 2

IDFC - Long term infrastructure bonds What are infrastructure bonds? In 2010, the government introduced a new section 80CCF under the Income Tax Act, 1961 (" Income Tax Act ") to provide for income tax deductions for subscription to long-term infrastructure bonds and pursuant to that the Central Board of Direct Taxes passed Notification No. 48/2010/F.No.149/84/2010-SO(TPL) dated July 9, 2010. These long term infrastructure bonds offer an additional window of tax deduction of investments up to Rs. 20,000 for the financial year 2010-11. This deduction is over and above the Rs 1 lakh deduction available under sections 80C, 80CCC and 80CCD read with section 80CCE of the Income Tax Act. Infrastructure bonds help in intermediating the retail investor's savings into infrastructure sector directly. Long term infrastructure Bonds by IDFC IDFC issued an earlier tranche of these long term infrastructure bonds on November 12, 2010. This is the second public issue of long-te...
Related Posts Plugin for WordPress, Blogger...
Invest in Tax Saving Mutual Funds Download Any Applications
Transact Mutual Funds Online Invest Online
Buy Gold Mutual Funds Invest Now