5 investment lessons to learn from 20193 min read . Updated: 13 Jan 2020, 05:11 PM IST
The year 2019 ushered in a unique market scenario and made investors question principles that stood on shaky ground. Learn from the experiences of 2019 to kickstart your 2020 investment journey.
Investing is an art that feeds off statistics and sentiment and as such, learning from the past is essential to make good moves in the future. The year 2019 ushered in a unique market scenario and made investors question principles that stood on shaky ground. Hence, to kickstart your investment journey in 2020 it’s wise to learn from the experiences of 2019 and draw out a strategy accordingly.
To help you, here are 5 investment lessons from 2019 you should pay heed to.
The credit quality of the asset matters
The year 2019 displayed to all that the mode of generating returns is not something that you as an investor can afford to wholly overlook. Credit exposure here is key and funds, for instance, that were linked to defaulting bonds suffered. The returns generated were often negative and so, when picking an asset, it becomes incumbent on you to ask the right questions, trying to map out what you can expect from the instrument in terms of consistency.
Net portfolio returns are of utmost importance
In a turbulent market, you’re bound to have a mix of winners and losers and 2019 shows that it's no use harping about doubling your money through one asset if you have a copious amount of underperforming assets in the bag too. Your portfolio’s net return rate is the weighted average of all assets and hence, diversification becomes an important factor to ponder over, more than the individual gains of a particular asset.
Asset allocation is key to navigating market cycles
Drawing from the previous point, a must-have for 2020 is good asset allocation through a well-thought-out strategy. What asset allocation ensures, is that your portfolio generates expected or at least high returns, even as the market dips, rises, and veers off to an unknown terrain. In terms of navigating through tough cycles, non-risky instruments are key and one you can consider is the Bajaj Finance Fixed Deposit.
To illustrate why, consider that it offers returns on investments made for at least 36 months at a rate of up to 8.35% for senior citizens and 8.10% for new customers. Further, the FD’s yields aren’t affected by the market’s performance and are vouched for by CRISIL and ICRA, who have assigned the FD their highest stability ratings, FAAA and MAAA respectively.
Take a look at this table to know how much you can earn through this FD.
*Figures generated by an FD calculator
Spurious decisions can be counterproductive
Markets can be extremely difficult to grasp in their totality and as a retail investor, 2019 revealed that it is best not to adopt a know-it-all kind of attitude but rather, stay put while the market takes its course. Experts advise similarly, that if you want to invest in equity you forget about timing the market to perfection but rather focus on time spent in the market and how you can meet your particular goals. In the realm of mutual funds, the SIP route provides a means of doing just this.
SIPs is similar to what Systematic Deposit Plans are to FDs and the latter are a quick savings tool, allowing rookie investors to begin wealth building through bite-sized deposits, made regularly.
Debt funds aren’t always as safe as you think
The year 2019 revealed, and in a stark manner, that the element of risk involved with debt funds must be evaluated. In other words, the recent past performance of fixed-income assets cannot be the sole criterion on which you decide. If you are considering a debt fund over an FD, for instance, you must also consider that not so long ago, prominent names were amongst those that defaulted.
Similarly, if you do intend to make an FD part of your portfolio, pick a lender like Bajaj Finance to benefit from not just consistent yields but features such as the Multi-Deposit facility, which allows you to invest in several deposits, and ladder them, through a single cheque, and the Auto-Renewal facility which keeps you invested for a longer term, in a hassle-free manner, for greater yields.
So, make use of these 5 tips from 2019 to start off the New Year 2020 on the right foot and get started with Bajaj Finance online FD to bring a feature-rich FD into your portfolio soon.
Disclaimer: This content is distributed by Bajaj Finserv. No HT Group journalist is involved in the creation of this content.