Investors should tread carefully
Experts advise to buy equities at regular intervals & invest in fixed income in short term to beat global uncertainties
When the market is losing ground steadily, investors should buy shares at regular intervals. Safe havens such as fixed deposits and fixed maturity plans should be used only in the short term. “People have a tendency to be entirely one-way, where the allocation of funds, for example during the (turbulent) time,” said Jayant Pai, vice president, Parag Parikh Financial Advisory Services. One-sided approach, experts say, means trouble.
Take, for example for gold as an asset. Also investors who seek to metals due to economic uncertainties. The rat race is pushing prices to record levels, and a sharp correction is imminent, said market observers. “Investors should be cautious. You should not lump sums to invest in any asset class,” says Anil Rego, CEO of Horizons law, an asset management firm.
In the case of bank FDs, investors should lock your money only for 3-6 months. “Set short-term options keep coming. Do not lock your money in three or five years the stock market instruments have become the best at this time,” said Pai.
Fixed income products such as convertible bonds issued by non-corporate houses are more risky in many cases turn out to be the instruments for most warranty. It is better to go to the instruments issued by companies of the most popular financial advisers said.
Although the fixed maturity plans (FMPs) are interesting now, would lose their luster once the direct tax code will come into force, analysts said. In addition, the FMP returns, as opposed to the bank soon, are indicative only. The good old early to offer lower after tax returns, but offer some interest income is also to ensure the safety of debt.
While investors do not lose money in mutual funds debt (MFs), they must also understand that the products are linked to the NAV (net asset value) is not completely safe, experts say.
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The biggest challenge is to make investors understand that they need to increase the effectiveness of its total exposure to shares in such turbulent conditions in the markets, say advisers. “Investors should buy more products related to its share values in the guard of the portfolio in a declining market,” said Pai.
A systematic investment plan (SIP) on CM activities spread over one year would work well, says Rego. Investors can also consider a SIP-income funds, he said. The bottom line is, do not go overboard in any asset class and follow the plan of distribution of the original assets, making the necessary adjustments.
Source: [ET]
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