Are you ignoring debt mutual fund at this
moment…??
In these days most of the market
expert and economist are very bullish on equity for investment. We are reading
the news paper and watching business channel and the majority of people
(including expert and common person) express the hope of rosy days. Everyone hope
for better days (Achhe Din). I am also not against it. After all UPA govt
mess, we the citizen of India have chosen the full majority government and hope
for some good action in each front including economy, internal security,
defense, foreign policy, social sector etc.
If we analyze, we will find that UPA-2
was worst than UPA-1. Increasing inflation, increasing fiscal deficit, higher
interest rate has translated into the poor manufacturing growth, unemployment,
and bad shape of economy. The slow decision making on many key issue has added
the problem more and our GDP has reduced to almost 4.5% at the end of UPA-2
government.
After September, 2013 the announcement
of PM candidate Mr. Narendra Modi from BJP, equity market has shown spectacular
performance and it has been continued throughout election campaign till the
budget which has presented by the newly elected government. Now the big
question is whether this rally would be continued till the next couple of the
year in the same manner or not. Mutual fund house, stock broker and equity
market participants are still very bullish and positive about the share market
performance in the next one or two year.
After analyzing all the above past events, I have come with
some key points for the investors which every investor should keep in mind
before investment at the present scenario.
Do not expect or hope and magic from
the new government in near term. This government has good intention and
capacity to bring the economy on the right track but for this you will have to
wait. Keep in your mind, there are no magic stick for economic reform. The
government will take time like 2-3 years to repair the economy after that there
may be come positive results.
I always say and write in my previous
articles that equity investment is the best option for long term investment but
for short term it will always volatile. So please do not enter in this market
for some short term gain. There is always risk in the market in short term
performance.
Do not try to time the equity market,
you will lose the money in majority of the time. According to AMFI data, last
year in June 2013 there was huge inflow in debt market and the inflow was very
poor in equity market. Everyone can see the performances from last June to this
June, equity asset class has outperformed to every available asset class. It
means majority of speculator and market timer was wrong at the time of last June
2013.
We are seeing the same trend at this
moment after the big market rally, now the inflow of fund has increased many
folds in equity segment in compare with the inflow of last year at the same
period and inflow has reduced surprisingly in the debt mutual funds. Here, you
can see the very clear trend that majority of investor only try to time the
market and want to make money in the short term.
In my suggestion, stick with your
financial plan and keep investing in both assets equity and debt accordingly.
Equity will always outperform to all the asset class in the long term. Do not
ignore debt asset class at the present scenario. Do your proper asset
allocation and avoid overweight towards any asset class particularly equity.
It seems, I should stop at this moment
as the article has become lengthy already. We will discuss more in next
articles.
If you want more information
regarding investment or you have any other query about investment feel free to
ask us.
Warm regards,
Arvind Trivedi
Certified
Financial Planner
