A 12-Point “Cheat Sheet” For Investors Right Now
Investing in the post-COVID era is no easy task! Are you tired of all the confusing jargon that investing invariably entails wading through? Here’s a simple, 15-point “cheat sheet’ that’ll help you stay firmly in charge of your money right now!
1. We may be witnessing early signs of a recovery in real estate in metro cities. If you own property, don’t be in a hurry to sell. If you can wait a couple of more years, wait. We’re still in a buyer’s market in most metro cities – but the trend may begin to shift over the medium term.
2. Repo Rates are going to go up in a hurry, and so will home loan EMI’s. Don’t take up a home loan without factoring in a 10-25 per cent increase in your EMI that could take place very soon.
3. The crazy bull run that we witnessed between 2020 and 2021 will probably not repeat itself anytime soon. Temper your expectations and remain disciplined with your investments.
4. Although we may actually witness fairly decent equities coming through this year – the unfortunate fact is that a year or so of earnings growth is already priced in – so that shouldn’t be a reason for you to throw caution to the wind!
5. Don’t make any large portfolio adjustments in one shot. If you’re nearing key goals, stagger your way out of equities through 6–9-month STP’s. If you’re planning to invest for the long term, stagger your way in using 6–9-month STP’s.
6. Allow your equity SIP’s to continue uninterrupted. Volatility, in the long run, will play to your advantage.
7. Add some sectoral funds to your Mutual Fund portfolio – Financials, Infrastructure and Technology are worthy of consideration. Do not let sectoral funds exceed 15 per cent of your overall portfolio of Financial Assets.
8. Within your fixed income portfolio, allocate 70 per cent to medium term debt funds with an average maturity of around 3-5 years, and 30 per cent to floating rate debt funds right now.
9. With global sentiment turning risk off, crypto appears to be on its way down a slippery slope. Collectively, they represent a risk that’s not worth taking. Remember, what has gone down could go down further. Bitcoin at USD 29K may not be a value bet!
10. Don’t be greedy or hang on to your previously held points of view. Be fluid in your beliefs. Remember, earning 20 per cent absolute returns from half your portfolio over the next two years is much better than earning no returns from your entire portfolio for two years (a distinct possibility for lump sum investors into equities)
11. Stop chasing “listing gains”. Many IPO’s being launched right now are OFS (Offer for Sale), which means that the IPO is really a route for promoters to reduce their holdings, and not for the company to receive any new capital. As a broad thumb rule, most IPO’s being launched right now are best avoided.
12. And lastly, completely avoid traditional life insurance policies this year. Beneath their fancy veneer, you’ll find a poor investment that will likely yield you sub-6 per cent returns over a very long-time frame.
