The first 6 months of 2012 are drawing to a close. If you think for a moment, then in January 2012, all of us must have made many promises to ourselves about how we would invest our money and follow a disciplined investment strategy.
A lot of investors might have set higher expectation from the stock market. We know where we are now.
What are your learnings and how do you intend to improve in the second half of 2012 ? Let us check for some investment tips for 2012 H2 in India.
H1 2012 – battered and bruised
The stock market has been a bitchy ride for most of the investors, gyrating like a lost pendulum. For those who trade and live off by looking at the ticker every minute, it should have been quite a disappointment.
What bothers most of the investors and experts here is that the stock market is yet to return something in the positive terrain for some years now. So your concept of long term investing needs to be looked at !
If you had a goal for 2012, then around 5 years back in 2007 you would still have parked your money into equities with the hope that you will slowly move the money into safer investment avenues like debt. However, your corpus would have already eroded in the last 5 years – so you would not have the amount you planned for your goal. Scores of investors and planners are caught in this quagmire of what long term investing means now.
The point I am driving home is that investors now need to think long term as a bit more longer term. In today’s market scenario, long term is more than 5 years !
Those who had stuck to investing in mutual funds via the systematic investment planning route do not have to worry as to where the market is headed. This is the simple, right and laid back way of investing money.
But all of us have been impacted by high inflation and FII’s pulling out money from India. Basic cost of living has increased and it has begun to hurt the wallet now. Everyone is dying for low prices on petrol and vegetables.
With Pranab Mukherjee exiting the FM’s seat and Prime Minister Manmohan Singh taking over the reins of the FM, it is widely speculated that the investing climate of the country will improve. That could provide some momentum to the sagging economy and the listless stock market.
Investment tips for 2012 India – H2 only
Personally, I would keep no expectations. I would get worried only if I have short term goals for which I need money but which is parked in equities. To fill in the short fall, you could potentially backfill from other short term goals or borrow money from somewhere. If the goal were to go on a vacation or to buy a car, see whether you can push the milestone out by some months till more clarity emerges on where we are going with our economy. Get worried only if you have must have goals that you cannot do without.
But honestly, I would keep zero expectations from the government on the policy front.
1. The holy grail to investment tips for 2012 second half is to stick to your asset allocation and keep investing in mutual funds, both equity and debt, and also in gold ETFs. Avoid lump sum investments and go via the SIP route. Avoid direct trading in the stock market if you do not have the capability to understand how a company will perform – tips and TV recommendations made money for the stock broker always.
2. Real Estate prices are not ebbing though demand has slumped – but isn’t that always been the case of real estate in India – it still amazes me as to how this sector is without regulation when it forms a middle class investors biggest investment in terms of money. So while borrowing is not coming easy and cheap, the cost of goods you want to buy is increasing.
3. The policy makers might cut rates in the future and the interest rates on your home and car can potentially come down but we have to wait and watch whether that is going to happen in the latter part of H2 or much earlier. I am sure people will be watching this space with bated breath.
I think we must keep the noise out of the scheme of things and concentrate on basic investing for your future. Sit back and spend time with your family and let the pain ease out – I know it is simple when said but hard to implement.
But in these tough times, self control and sticking to the basics of personal finance is what will differentiate you from the rest of the herd.
Your turn now.
What a timely article, Sensex roars up over 2% on hopes of economy revival.
But i think its far from over, we need to have patience. A lot of people have been disappointed by how Sensex has faired over this year. But they fail to understand that Equity is for long term. If you have a horizon of over 10 years then only invest in equity. Keep your SIP’s going…..
Agree, this is the perfect time to keep the SIPs going or may be increase a little because when economy booms in 10 years, this time would to sow the seeds would be long gone.
I hope the sardar will do something this time. He has taken the reins of FM in his hands and I think this is the last opportunity we have.
Good consolidation of what our finances have gone through and how we should tackle it going forward.
However, what about the person who started investing in equity for child high education 10 years ago and need the money now or next year? One might say that start moving money into debt funds couple of years before goal completion but again one could land in the same scenario. How to tackle such scenarios?
This has been a big problem Vivek. Long term is getting longer !
I think one needs to park money into safe instruments much earlier, say 5 years instead of 3 years.
Most of such scenarios do not happen too often and we can only take our learnings and improve but you are right about the fact that the investor in your example would be caught on the wrong side of advice !
In my opinion the advise “self control and sticking to the basics of personal finance” holds good in all times and not just during the lows. You follow this advise and your investments/financial planning will never go wrong.
Thanks for highlighting!
Personal Finance is simple, keep it simple !!!
So what if I get a bonus of, say 20k to 50k? You may consider any other small lumpsum money that somoene gets. What is the best plan now ? As we can’t start off with SIP (this is a one-time income, atleast for a quarter), do you suggest we put this into a 3-month FD and then move the funds constantly to MF ? Or a 5 year FD?
Can’t buy too many units of Gold ETF either, it’d be a lumpsum investment then…
Hmmm, I wish they get things more on that Rajiv Gandhi 50% tax free thing that was in the budget (for those who have <10Lakh PA pay cheque)…
I’d suggest to invest the money gradually into MFs via SIP. Keep the money in savings account or 6/9 months FD and slowly move funds to MFs every month from FD account.
SIP is the best way to invest in the market. Make sure your goal is for 5 years and above, You will definitely get good returns. Other alternative would be to invest lumpsum in liquid fund of MF and from there start Weekly STP to the equity fund. This way you would get more returns than the normal savings bank. You can expect atleast 6% returns from liquid funds.
You can keep in liquid MFs and move to equity diversified MFs via SIPs. Better still ,pay off bad loans (credit card/ personal loans).