TradeBizz Research - How to invest an Rs 10 lakh amount across equity and fixed income assets in 2017



When they have cash to invest and save, many investors often find themselves in a dilemma, failing to decide which asset class to pick and how much allocation is to be made.

Even seasoned investors often stumble, while trying to draw the best strategy to create wealth consistently. The best way is to allocate some part of the fund to mutual funds, and keep the rest in stocks, gold as well as cash.

Investors who can’t track the market on a daily basis should use the mutual funds (MFs) route to enter the equity market via systematic investment plans (SIP). 

Calendar year 2016 failed to cheer investors, but calendar 2017 holds promise, especially if you love equities. If you have sufficient funds to enter the market, this is the best time as the domestic market has already corrected over 10 % from its record high. 

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For simplicity, we have taken Rs 10 lakh as investible amount. 

“Investors with a long-term horizon should invest 30 % in equities, 30 % in mutual funds, 15 % in fixed deposits, another 20 % in cash and the rest 5 % in gold,” Kamlesh Rao, CEO, Kotak Securities, told ETMarkets.com.

“In the coming year, investors will have to focus on economic recovery post demonetization, as the real economy expands, as well as the pace of interest rate hikes in the US,” he said. Rao said the equity market is likely to outperform other asset classes in 2017.  



The outlook for the equity market remains constructive over the next 12-18 months amid attractive valuations after the recent correction.

The Nifty50 is currently trading at a forward PE of 16.4 times, which is lower than its 10-year average of 18.3 times.

Corporate earnings growth is also expected to revive strongly after the second half calendar year 2017. Investors should use volatility to systematically buy quality stocks with an investment horizon of 2-3 years.

"Over the last year-and-a-half, it has become reasonably evident that real estate is not really going to be a great idea in terms of long-term returns on a portfolio. Investors have started swinging completely other direction, loading up on equities," he said.

The other in-between asset class, according to Mukherjea, fixed income, which has not been adequately explored or sold in India. “My reckoning is that this is actually a nice place for investors to be in.”

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