As the Lok Sabha Elections 2024 enter their final phase, investors might feel anxious about the upcoming results next week. Experts like Feroze Azeez, Deputy CEO of Anand Rathi Wealth Limited, suggest following these simple and basic investment strategies:
1. Have an Asset Allocation Strategy
The most important step is to have an asset allocation strategy. While there isn’t a one-size-fits-all solution, some standardization can be achieved through proper asset allocation. This strategy should be based on your goals, investment horizon, risk appetite, and liquidity needs.
According to Azeez, creating the right mix of assets based on your risk tolerance can help you achieve your goals. Combining debt and equity, which have a low correlation, can target returns around 12% depending on your investment horizon. Historically, equity funds have delivered an average return of 14% over the long term, while debt mutual funds have returned about 6%.
2. Stick to Your Asset Allocation
Choose the right asset classes and stick to them. Rebalance your portfolio as needed according to your asset allocation strategy. This approach helps you target specific returns while managing risk.
3. Invest Across Market Caps for Balanced Returns
For balanced returns, invest across different market capitalizations. The Nifty 50 and Nifty 100 are expected to deliver 15-16% earnings growth in 2024-25, while the Midcap 150 and Smallcap 250 are expected to grow by 11-15%. Indian corporate profits are growing healthily across these segments.
Currently, large caps like Nifty 50 and Nifty 100 are fairly valued, while small caps have attractive valuations. However, there is some froth in the midcap segment, but considerable upside potential in the smallcap segment.
4. Continue Your SIPs – Timing the Market
Continue your Systematic Investment Plans (SIPs) regardless of market conditions. Azeez analyzed two scenarios involving Nifty investments: one where the investor put money in at market peaks over five years, yielding a 10.84% return, and another where the investor made regular SIP contributions, resulting in a 14.02% return.
Following these strategies can help you navigate the election period with more confidence and potentially better returns.
Disclaimer: The views and investment tips expressed by investment experts on Sharepriceindia.com are their own and not those of the website or its management. Sharepriceindia.com advises users to check with certified experts before taking any investment decisions.
