1) How should one plan his finances in new-year keeping in mind the rules of financial planning?
- For lumpsum investments towards long term goals we recommend STP route for investments in mutuals with deployment spread over 24 – 36 months. This period can be reduced to 6-12 given the current market situation.
- One must also factor in short term capital gain that might accrue in a year or two as the rally comes to a close
- Recommended to use equities as an option as well in this situation.
- Strategy for short term and medium term goals remain the same.
2) For a beginner, what would be advice, how should he start?
- Start via SIP route for long term goals.
- Consider real estate
- Also consider some blue chip shares (if budget / savings allow for that)
3) Which thumb rules should one follow when going to buy any financial product like ULIP or Insurance Policy?
- Buy term plan and avoid any other type of traditional product
- ULIP is not advised as such however if one still wants to get this then check on the following
- Lowest administration charge
- Full liquidity after 3/5 years
4) Since the stock market has already factored in a lot of positive signals and is on a high, what should an investor expect so far return is concerned and what should be his strategy?
- There is still a long way to go
- The situation is going to be promising for another year or perhaps more.
- Get aggressive about equities and make lumpsum investments into shares and mutual funds.
5) Physical Gold has given negative 8% return whereas Gold ETFs were almost flat in 2014, how should an investor see gold as an investment asset in 2015?
- Gold appreciates during unstable markets and during recessionary times and during periods of pessimism.
- Hence gold and precious metals will fare badly and I expect a further fall hence avoid gold for now.
- Even as a portfolio strategy it is better to wait for now.
6) In 2014, small and midcap mutual funds over-performed the large caps, is it prudent for investor to rebalance portfolio in favor of small and midcap funds in 2015?
- The trend will continue so if one has little or no allocation towards small and mid cap then one must do this
- If one has already become overweight then perhaps exercise caution; in some cases also consider moving money to large caps if exposure is direct instead of MFs
7) As due to change in tax regime, the debt fund investors got a setback in 2014, what should be strategy if one (low risk investor) wants to invest major in debt funds?
- Debt fund investor will have to hold longer.
- Alternatively if the tax situation permits then consider high return corporate deposits
- Also one can consider tax free bonds from the secondary market.
8) For investors interested in real estate, what would be the advice? Are we going to see corrections in property prices or those will remain at current level?
- Large & metro cities have a lot of supply and little or no sales. Price appreciation will be marginal.
- Once can consider smaller cities and land.
9) If one has to decide about taking loans, what should he do, wait for a couple of months or finalise the deal?
- If it is for the primary home; anytime is a good time.
- Go with floating rate as the rates will fall in a year or so
10) Last what should be the topmost new year financial resolution (to be asked to both the guests)
1. Invest in stocks
a. Do not miss out on the rally in the stock market
b. Create a new source of income viz., dividends.
c. Do not speculate
2. Manage loans better
a. Make full use of reduced/falling interest rates in applying for loans
b. Do not be in a hurry for repaying & prepaying loans especially home loans
3. Organize old paperwork viz. physical shares etc which will unlock money
