In India attachment to gold is sentimental and emotional. For many of us, this yellow metal is top on the shopping list in festivals. The physical gold bought by us is rarely sold in the market due to emotional attachment with it. But if you buy units in gold exchange traded fund listed on stock exchanges, it will be easier to sell them when prices rise.
It is important to allocate a meaningful Component of your investment portfolio to gold. This allocation helps in bringing down the portfolio risk by reducing their standard deviation of the portfolio.
Gold acts as insurance in difficult times when other components of portfolio are not doing well. So, it is a smart idea to buy some gold in your portfolio.
According to experts, 5% to 15% of your portfolio should be in gold. For this, one simple option available is gold ETFs (exchange traded funds). These funds provide ease of transaction, tax efficient nature, safety and small unit such as one or half gram gold.
Very few people know that units of gold can be bought in a systematic manner – say one unit a month, by instructing your equity broker for that. There are automated gold ETF – systematic investment plan (SIP) available with most equity brokers.
So, keep adding gold to your portfolio at regular interval. This would provide a strong protection to your portfolio in times of economic slowdown.
The crash in gold prices have triggered a surge in demand for jewellery, but analysts are concerned that the dip could “significantly” hit the asset quality of gold loan companies.
Market Price of Gold was Rs 26,040 yesterday. It is now cheaper by 25% for every 10 grams. Due to fall in prices footfalls at jewellery shops have increased but it may be due to upcoming marriage season.
But glitter of gold is losing as consumers attention is now on banks and gold loan companies whose collateral value would be under stress. Analysts are of the view that the portfolio of gold NBFCs is vulnerable. According to India Ratings NBFCs are giving loans at 80% LTV.
Today gold is only a form of asset and its glitter as jewellery is vanishing. People now want gold only for the purpose of investment. Gold loan is becoming very popular.
Further discussions are always welcome.
For the new financial year (FY14), investors should park their funds in different asset class with well thought out allocation.
One should follow stock specific approach rather than sector/index specific, which may reap good returns going forward, as is proven historically.
FMCG, pharmaceutical and IT sector will acts as a shield during the market downturn.
Euro Zone crisis has a spill over effect, which may crop up in a country specific basis, though US is showing strong signs of recovery, looking at the data points on the last 6 months’ basis.Therefore, global problems may haunt Indian markets going forward as developed economies are still running on stimulus packages.
Political uncertainty will boil down to less economic reforms and lacklustre markets. In this scenario, investors should go for SIP in MFs or in direct equities.
As mentioned in the Union Budget 2013-14, the current account deficit is worrisome and Q3FY13 number of 6.7 per cent gives a strong wake-up signal. If the government does not promote exports and offers sops rather than only curbing imports, then CAD would widen and be a big detrimental factor towards a downturn.
Stocks which investors can look at in FY14:
1 Petronet LNG
2 Indian Bank
3 Eros International
4 Pidilite Ind Ltd
6 Hindustan Unilever
7 Bata India
8 Swaraj Engines Ltd
9 LIC Housing Finance
10 JK Cements
11 IL&FS Transportation
For a normal investor, equity market is a difficult place to be in, because of study requires to pick best stocks. That is the reason people move to mutual funds where their funds are being managed by professionals. But only choosing scheme of mutual fund is not enough.
It is important to keep monitoring one’s mutual fund portfolio. After choosing good funds one has to give the investment sufficient time to perform and fetch returns.
The correct approach after carefully putting together the portfolio is to do a review once every three or six months.
So keep your portfolio intact if it shows good performance as compared to index and peers. Stay invested to keep the reap the rewards but keep your eyes open and review the portfolio from time to time.
Buying and forgetting mutual funds is done at one’s own risk.
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Portfolio is a group of financial assets such as stocks, bonds and cash equivalents. It is a collection of investments all owned by the same individual or organization. Portfolios are held directly by investors or managed by financial professionals. It should show a spread of investments to minimize risk.
Portfolio management is about analyzing strengths, weaknesses, opportunities and threats in the choice of debt vs. equity, domestic vs. international, growth vs. safety and many other trade offs encountered in attempt to maximize return at a given level of risk.
Some major tasks involved with Portfolio management are:
1. Taking decisions about investment mix and policy.
2. Matching investments to objectives
3. Asset allocation for individuals and institution
4. Balancing risk against performance.
There are two types of portfolio management i.e.
PASSIVE MANAGEMENT: It involves tracking of the market index or index investing.
ACTIVE MANAGEMENT: It involves active management of a fund’s portfolio by manager or a team of managers who take research based investment decisions and decisions on individual holdings.