Dear All Two question that is bothering all of us are:
1. "Where to invest in current market conditions when volatility is the order of the day? 2. What to do of the existing portfolio which is probably down in the range of 50 to 70%? Answer to Question 1: The good news of the markets and having a wide variety of asset class is that in midst of gloom and volatility there are some asset classes which is shining right now. Our advice to you is highlighted below: 1. One portion of the cash you are seating on can be invested in Income funds. These are the funds which invest in Government of India securities and Quality corporate bonds. The traditional wisdom says that when interest rates goes down, your returns on fixed income instruments will also go down. But the Bond funds and Income Funds returns goes up whenever interest rates goes down or the call on interest rate is that it will go down. Currently the interest rates are moving south and are expected to remain soft in the immediate near future. There are two risks involved in a bond fund- Interest rate risk and Credit quality risk. The interest risk is currently does not exist with the call on interest rates on the softer side. The credit risk is reduced/mitigated by the fund manager through investments of a large portion of the portfolio in Government of India Securities (GSEC) and balance in well rated and researched corporate papers. Our view is that there is money to be made in next 6 months in this category of portfolio. You can either buy GSEC/ Corporate bonds yourself or use the expertise of fund managers through the Mutual fund route. 2. In case you can lock some amount for a 3 year period, invest in Tax Saver Schemes of Mutual Funds. 3. Despite the volatility, you should continue to invest in Large Cap Equity Mutual Funds. Answer to Question No.2: The only way we can recover the losses is by staying invested in the existing portfolio. Having said that we would recommend you to switch your existing investments in MIDCAP oriented mutual funds to large cap funds. Whenever the market recovers, it is the large cap which tends to recover faster. You may ask that the values are so low, how can we book losses? Though you are withdrawing at low levels but you are also entering at lower levels of NAV in large cap funds. INTERESTING DATA ON BSE SENSEX OVER LAST 28 YEARS: 2008 YTD IS THE ONLY YEAR IN LAST 28 YEARS WHICH HAVE GIVEN SO MUCH OF NEGATIVE RETURN ON BSE SENSEX. YOU CAN SEE THAT MOST OF THE TIME IN PAST MARKET HAS REBOUNDED AFTER GIVING NEGATIVE RETURN. Over a period of time the fundamentals of our economy will come into play and we will see stability and sanity returning to the market. Since none of us know when this will happen, the logical wisdom is to invest regularly in the market at current levels rather than watch it from sidelines. Thanking you, With Best Regards SHENOY INVESTMENT AND FINANCIAL CONSULTANTS PRIVATE LIMITED 11-A, KASHI NIKETAN, 2ND ROAD, CHEMBUR, MUMBAI - 400 071 TEL : 6797 3433 / 2521 2111 EMAIL : [email protected] [email protected] --~--~---------~--~----~------------~-------~--~----~ You received this message because you are subscribed to the Google Groups "BETTER PERSONALITY GROUP" group. To post to this group, send email to [email protected] To unsubscribe from this group, send email to [email protected] For more options, visit this group at http://groups.google.com/group/BETTER_PERSONALITY?hl=en -~----------~----~----~----~------~----~------~--~---
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