Your 2021 Investment Guide and What to Expect in the Budget
The year 2020 was unusual, and events changed dramatically from disappointment to investment. Stock markets crashed almost 40% in March in Covid’s fears, but they recovered wisely only last year at the highest level. Interest rates have dropped during the year, lowering the returns of FD investors but increasing the return on credit. Amid uncertainty, gold continued to perform well, rising 31% during the year to emerge as the most efficient commodity segment by 2020.
Impact on investor portfolioLetting Budget Different revenues received by different currencies alter the portfolio distribution of assets. The allocation of investment shares that started in 2020 by 50% in equity, 40% in fixed income and 10% in gold would not have changed much if he had not added more funds when the markets collapsed. If he can, the share of the money will now be more than 50%, which requires a re-evaluation of the portfolio. Reimbursement restores the actual distribution of the asset, thereby reducing the risk to the portfolio.
Similarly, gold has released a stellar return during the year and hopes look bright due to the global uncertainty caused by Covid. But if the allocation of gold in the portfolio increases by more than 3-4 percent, it may be time to make a profit. Or at least don’t invest a lot of money in yellow metal now.
How to invest in 2020 Investment class / option% return by 2020 Gold 31% Sensex 14.5% Equity funds 14.2% Debt funds 8.5% Fixed money 6% Wealth 2-3% Data from 30 Dec
Be careful! Even debt financing and FDs can be risky The past few years have shown how risky credit cards can also be dangerous and why you can no longer invest in your banks with your eyes closed. Investors should avoid debt laundering in the form of low bonds just to improve returns. Franklin Templeton’s article, in which an estimated Rs 28,000 of investors’ money has stalled due to poor financial management of the fund’s management, underscores the dangers of pursuing a high yield. Stick to the funds with good quality paper, even if that means a slightly lower return.
Similarly, investors should not be tempted by the high prices offered by small and secretive banks. The problem of PMC Bank, Yes Bank and Lakshmi Vilas Bank are all examples where the top NPAs are tarnishing the image of the bank. Check the financial status of the bank before investing. Invest only if the NPA as a whole is below the acceptable limit of 4-5% and the bank has a strong interest rate of more than 9-10%.
Is it a good time to buy a house? The property has been under garbage dumps for many years, and Covid exacerbated the situation. To clear up big unsold items, wealthy builders are now offering attractive discounts. In addition, interest rates on home loans are very low, starting at @ 6.75%. So, a good time to buy a house.
While the acquisition of unused assets is highly recommended, buying for investment purposes is not a good idea. Of course, plan to buy your dream home or commercial property, remembering that you will be a resident. Given the unpopular economic perspective, you cannot expect a favorable return on rent for any important information. Therefore, it is best to buy only for yourself.
Are you covered enough? Before Covid hit, not everyone valued health insurance – especially people buying basic coverage. The huge hospital bills of many Covid patients have shown that a health insurance of Rs 4-5 lakh will not be enough. A family of four needs a higher cover of at least Rs 10-15 lakh. An add-on policy is an inexpensive way to improve your health cover without buying a new one.
It is also time to review the life insurance policy. Life cover should be sufficient to calculate all outstanding debts, as well as produce adequate repayments to replace the insured person’s salary. Inexpensive time protection programs are probably the best option to pay for life insurance. It is recommended at least 5-6 times the annual salary of a person.
Waiting for Nirmala Sitharaman’s budget As we enter 2021, all eyes are on the future budget of Finance Minister Nirmala Sitharaman. Stock markets are always at an all-time high and prices are rising. While the ongoing influx of FII investments keeps you on track, even hints of negative news at this stage could cause a decline. Investors should be realistic and take some advantage of the table at this time.
On the other hand, a good signal in a budget can take markets to higher levels. A few steps can improve investor sentiment, including a 10% tax on long-term capital gains in excess of Rs 1 lakh. If the budget increases the tax-free limit to Rs 2-3 lakh or completely eliminates long-term income tax, it will be good for small investors. Tax evasion will also help to improve the mood.