How the Indian Investor should look forward to the year 2019

Wealth creation process requires a regular review of the investment portfolio. This can be done in a half-yearly or yearly basis. Last year almost at the same time when the new financial year started we reviewed our investment portfolio and start investing according to the market trends. Many investors follow the DIY (Do it yourself) approach for their investment. Many times they get carried away with the running market flow. Investment should always be linked to your life goal’s but it is being observed most of the times investment is not done in accordance with our goals.

2018: Overview of Stock market

We have experienced phenomenal returns in Sensex in 2017. Markets gained 30 to 35%. BSE midcap grew @ 48% and small-cap surged 60%. Retail investors had great expectations from 2018 too. But Last year was disappointing for the retail investors. Sensex’s last year return was merely 3–4 %. In that small and mid-cap stocks and mutual fund dipped down considerably. Sectorial funds like banking, infra, and consumption funds also showed negative returns. IL&FS crisis made debt fund in trouble. It was a stock market turmoil for a whole year.

What lesson a retail investor has learned from all these events? One important lesson we all have learned is that our risk tolerance level is not as high as we assume in the short run. We get worried often when our returns go down. We get panic when we see negative returns in our mutual fund portfolio, which leads to anxiety and confusion over our financial decisions. This all happens when we don’t follow Goal Based Investment pattern and Asset Allocation pattern as per our risk profiling. So in the end, we incur losses in the short term.

It is been observed that many times DIY investor make an impulsive investment decision based on a friend’s or colleague’s advice or do random investment as per one’s convenience. So an investment portfolio based on this style lacks vision and it is just a ‘coincidence’. It can lead to huge losses in the short run and may lose compounding benefit in the long run if the regular investments are stopped suddenly and liquidated in fear. Everyone wants to invest in Bull Run and very few have the ability to be patient in the Bear Run and stay invested.

2019: Dos and Don’ts for investors

Where to invest your hard earned money in 2019? Is the basic question every investor has in his/her mind after experiencing market volatility in 2018? But long term investment does not depend on short term market volatility. An investor should focus on long term wealth creation. In DIY s approach while constructing your portfolio one should focus on life goals, risk profiling, investment horizon, and tax implication and then select the suitable financial product.

So to summarize, remember the following points before investing in this financial year.

? Be financial literate, do your risk profiling and study the financial product before investing.

? Focus on goal-based investment.

? Don’t blindly follow market trends. Before buying any product check whether it is suitable for your investment strategy.

? Stick to your asset allocation

? It is always advisable to consult a Financial Advisor before investing.

The investment process is a marathon, not a sprint. An investor should always focus on long term wealth creation. The focus should be on learning from his/her mistakes and try to rectify it in the coming years.

Glorious future is always waiting for us if we do proper Financial Planning, implement it and be committed for Financial Freedom !!!