Hello Readers! 

Wish All My Readers A Very Happy New Year 2021!!

Today we are on the first day of the year 2021. With the wind up of the year 2020, investors have very mild reasons to cheer, there was good volatility experienced by the market. Falling interest rates and bond yields made liquid funds and small saving instruments less attractive. And there were other reasons that disappointed the investors.

However, the rally that the market showed in the month of November, gave a good reason for Equity investors to smile. Although this also let those investors feel sorrow who redeemed their investment after they saw a fall in March. Here point is, many investors, both either existing or new, have the query in their mind, how they should plan their investment in 2021 and what are the best option where they can go investing in 2021?

Stagger Investments in Equities!

Well, the year was not so good for the Equity market, but the rally shown in the month of November by the market, made investors reestablish their trust in Equity Markets. In December, the S&P BSE Sensex crossed 46,000 points and continues to record fresh highs. The Nifty 50 index has gained 10 percent since the beginning of the year.

Good Liquidity in the market has geared to the rise of equity markets all over the world. While the prospects of a COVID-19 vaccine too have brought cheer and raised the possibilities of better economic growth.

Ups and downs are trends of the market and one cannot the timing of the two trends perfectly. So basically, when you invest in the Equity market or mutual funds, you must be patient and must take a longer timeframe while investing to get good returns and the benefit of compounding.

Currently, the equity market is recovering, and what analysts are looking more at, is the performance of companies. Earnings of companies haven’t yet improved much. Any negative surprises here can lead to corrections. So, keep your return expectation in check.

“In a low-interest-rate environment, return expectations from all asset classes need to be moderated. Investors should expect around 10 percent returns from large-cap equity mutual funds and exchange-traded funds (in the year of 2021),” says Nitin Rao, CEO, InCred Wealth.

Here we advise you, keep your portfolio diversified, across large, mid, and small-cap funds. Avoid thematic funds if you wish to limit your risks.

Add Overseas Funds in Your Portfolio!

Overseas funds are international funds, and they offer a good option of diversification and let you get the benefits of foreign markets. However, not all international equity funds are the same. You must choose carefully. Stick to diversified funds; it is better to avoid themes in this category as well.

It is suggested by the experts that one must allocate around 10 percent of your assets in global funds.

Bond Funds: Time to Stay Low!

Investors who had their investment in the debt fund of Franklin Templeton, their experience was not so well the previous year. However, debt funds that invested in good quality bonds delivered well this year.

Here again, experts say that Investors should match their investment timeframe with the duration of the bond fund. Low duration, corporate and Banking & PSU debt funds can be attractive investment options. If you are taxed at higher rates and can hold your investment till maturity, then consider tax free bonds.

Diversify Across Different Assets but Maintain A Balance!

In 2021, do not get attracted or deviated by past returns. Over-investing in one asset and under-investing in another based on past returns will prove disastrous. The best strategy is rebalancing your asset allocation with every change in your goals, or at fixed intervals. The second wave of COVID-19 and possible lockdowns can cause some market panic but use such declines to invest smartly.

For any kind of query regarding financial planning you can contact us at Shri Ashutosh Securities Pvt Ltd., we are here to help you in any way possible.

Happy Investing!

(Mutual Fund investments are subject to market risk Illustrations are for example only, there is no guarantee of returns. Past performance is not an indicator/guarantee of future returns).