Impact of general election on equity market

Impact of general election on our market

We are one of the largest democratic country in the world. The general election is the important event of our country. The financial market is keenly waiting the outcome of the election result. Our share market has also performed and made a new high as per positive outcome from this election.  Any unexpected or below from the expectation would impact badly on the market in short term. The election result would be come out on 16 May, 2014.

In my view, the outcome of election event is only important for short term. In last few trading days the volatility index has gone up significantly. Let see the market’s 2 days return after the election result:

Election Year	2 days return after election result
1999	6.05%
2004	-16.56%
2009	17.34%
2014	???

If we analyze the election result from 1991 to 2004, the sensex has given 20% return after 1 year. Although it is very difficult to predict the outcome of result but we can easily understand that business cycles will continue irrespective of any government. The long term fundamental is intact for our economy. The last few months has given a good hint for economy like CAD has come down, inflation has also cooled down, the future interest rate till October look stable and afterwards it should also soften which is good sign for our economy.

No doubt, election play important role in driving fundamental and push to the economy. I hope after election the elected government push the investment in system and growth would be on track. The delayed project will get green signal and some important decision would be take in speedy manner.

If anyone who has not invested in the equity market still, it is the right time to reap the benefit of the economy and start investing in the time horizon of 3-5 year. In the next 3-5 year, I expect the good return from the equity market. For retail investor it is the good time to enter the market for 5 year time horizon.

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

arvind.trivedi79@gmail.com

www.artofinvest.com

www.arvindtrivedicfp.blogspot.in

Debt Investment: Part 2

Debt Investment: Part 2

We are discussing about investment asset classes in these days. In the last blog we had discussed about debt investment. In today’s article, we are going to talk about debt investment products and its suitability. In our country, the awareness about debt mark is not as wide. Some debt investment avenue we are going to discuss below:

Government Securities:

It is issued by the government of India through RBI for borrowing from the public to meet various spending. In simple term government take loan from public and return that loan on fix date with fix interest rate. It is the safest product in debt category for capital protection and return. It is also known as gilt securities. Gilt securities include all government bonds, T-bills, state and central govt run instruments.

Post office saving schemes:

It is very famous among the investors as some of post office saving schemes gives saving option and tax benefit both through various schemes. It comes with different investment tenure and return rate. It provides safe investment opportunity to the investors. It is the one of the largest saving vehicle for the investors.

Public Provident Funds (PPF):

PPF is also a saving tool for wealth accumulation in long term. It come with 15 year lock in period and provide fix rate of compounding interest. The rate of interest announce by the govt every year. The investment in PPF and return from PPF both are tax free. The tax saving investment limit in PPF at present is Rs 1 lakh. Many banks are providing PPF facility in these days.

Debt Mutual Fund:

Investor can access debt market’s benefit investing in debt mutual fund. By investing in debt mutual funds investor get the benefit of various type of investment as debt mutual fund deploy their money in various government securities, corporate debt, bank securities etc. The main aim of these mutual fund are to provide capital protection with income generation. It comes with different maturity period so according to the need investor choose schemes very carefully.

Bank fixed Deposits:

It is traditional investment avenue for the investors in our country and is very popular among the investors. It comes with different maturity period. Rate of return on these fix deposits are taxable. Its post tax return is even not able to beat inflation but it is still popular as investors have a lot of trust in bank for capital protection. Keep in mind, fixed deposits upto Rs 1 lakh are covered under DICGC (Deposit Insurance and Credit Guarantee Corporation).

Corporate deposits, bonds and debentures:

Many corporate issues bonds, debentures for raising the money and offer a fixed rate of return. These types of investments carry credit and interest rate risk. Many credit agency issue the rating of these types of schemes. Understand all aspects like rating, tenure and return before investment in these types of schemes.

Its Suitability:

It is very good for those investors who prefer capital protection than return. It is less volatile than equity. It is safe bet for conservative investors. It is ideal investment for those whose goal approaching near. Those who needs regular income flow it is good investment for them. Before investment in debt securities, first assess your time horizon and then invest accordingly. There are wide ranges of debt products offer depending on your investment time horizon.

It is very vast subject and we cannot cover it in one article. If you want more information regarding debt investment or you have any other query related investment feel free to ask us.

Warm regards,

Arvind Trivedi

Certified Financial Planner

arvind.trivedi79@gmail.com

www.artofinvest.com

www.arvindtrivedicfp.blogspot.in

Beware…!!! Stop and think again before any investment

It is my 100^th blog. Thanks to all of you for your great support. Without you it was not possible to reach this figure. A lot of readers has given valuable suggestion and compliment. I have got lot of energy and material for thought during this journey. This journey is not only mine, in fact it is a “revolution of investor awareness” with the help of your participation.

Often, we rely on our friends and relatives for our investment decision. In most cases, these are bank agent, CAs, insurance agent, or so called advisors. For investment decision you don’t need only information, you should understand it better. You should plan for your financial plan yourself with the help of expert. Keep in mind, there is no investment product in the market which can guarantee for high return and zero risk. There is reciprocal relationship between in risk and return.

At the moment when you expect high return, you should also the analyze risk. If any product promises you for high return, then definitely there would be high risk. I request to all of you that never invest with close eye on the basis of trust. For sales agent commissions and targets are more important than you investment return. We often, trust our bank relationship manager and purchase the product on the basis of trust and brand name. After mis-sell the product which you had not required really, they earn huge commission and as the result your return get reduce.

I would like to share with you recent example. One of my clients have HDFC bank account. Client did not want any type of risk and wanted  to fix deposit for 1-2 year. Bank representative suggested him HDFC classic assurance plan for 20 year with insurance and promised 3% of sum assured bonus every year and after maturity there would be terminal bonus. According to the bank representative it was guaranteed benefit but when I had personally met the bank person and senior persons they were not able to show me any brochure about this promised guaranteed benefit. They were only showing me excel sheet on computer and only false oral promise.

Finally, client has also realized and refused the suggested product by the bank. As he was in the higher tax bracket so I suggested him some bond mutual fund it would be beneficial him as a tax point of view as compare with bank fix deposit. At the end, bank representative have also agreed with me that debt fund is better than FD.

I had also mentioned in my past blogs that do not trust any oral promise by any agent, friend or relatives. They will first care their own incentive and not your investment return. It would be better to prepare a financial plan with the help of professional financial planner and then invest accordingly.

For more detail about any other query related investment, you can contact me through my email.

Regards,

Arvind Trivedi

Certified Financial Planner

arvind.trivedi79@gmail.com