- As we enter the last phase of the Lok Sabha Elections 2024, investor nervousness is likely to set in ahead of the election results next week.
- Experts advise investors to follow simple and basic strategies to navigate this period.
- Feroze Azeez, Deputy CEO of Anand Rathi Wealth Limited, emphasizes the importance of having an asset allocation strategy in place.
Discover essential investment strategies to navigate the Lok Sabha Elections 2024 and achieve balanced returns.
Investors should have an asset allocation strategy in place
This remains the first key. There is no one-size-fits-all solution in investing; however, some standardization can be done through asset allocation, said Azeez.
The asset allocation strategy should be based on factors like goals, investment horizon, risk appetite, and liquidity requirements.
While investing, we need to build a strategy with the right asset mix based on our risk appetite to meet our goals. Debt and equity have a low correlation, and a combination of these two assets can help in targeting a return around 12% based on your investment horizon, said Azeez. Equity funds have delivered an average return of 14% over longer tenures, and Debt MFs have approximately delivered 6% returns.
Stick to asset allocation
Choose the right asset classes and stick to them. Rebalance as and when required as per your asset allocation strategy.
This portfolio mix can help in targeting respective returns with calculated risk.
Invest across market caps for balanced returns
Nifty 50 and Nifty 100 are expected to deliver 15-16% earnings growth in 2024-25, while the growth of Midcap 150 and Smallcap 250 is expected at 11-15%. Indian corporate profits are on a healthy growth path across the three segments.
Attractive valuations of Small Cap and fair valuation of Large Caps: Nifty 50 and Nifty large cap 100 are currently fairly-valued, there is froth in Nifty midcap 150 and considerable upside to Nifty smallcap 250.
Continue your SIPs – Timing in the market
The analysis of two scenarios where Azeez has taken the investments of two investors of Nifty shows that when invested in peaks for 5 years, the return came at 10.84%. Nevertheless, when invested regularly through SIP, the returns came at 14.02%.
Conclusion
In conclusion, as the Lok Sabha Elections 2024 approach, investors should focus on maintaining a well-balanced asset allocation strategy, invest across market caps for diversified returns, and continue their SIPs to mitigate market timing risks. By adhering to these strategies, investors can navigate the election season with confidence and aim for stable returns.
