In response to central bank benchmark interest rate hikes in recent months, most banks have increased fixed deposit (FD) rates to provide much-needed relief for seniors dependent on interest income. Gold and silver prices have risen in the last few months, with the latter up a whopping 25%. The stock market was turbulent towards the end of the year with a number of issues including news about the outbreak of the new Covid variant BF.7.We looked at different asset classes and how they fared in 2022 and investment Let him figure out what will happen around 2023 for the house.
Read also | 5 investment resolutions to make this year
Stocks as an asset class
Sensex took the roller coaster at 58300 at the start of the year and dropped to 51000 in June to finish the year at the 61000 level. Sensex made a modest return of 4.65% year-to-date (YTD), but it did pretty well compared to many economies. Investors did not have a pleasant experience with his IPO. Many of his IPOs were met with lukewarm responses, but many were below the issue price. Compared to previous years, the pace of demat account openings over 1 billion has slowed significantly, reflecting investor apathy. The future stock market is likely to be in recession due to a sharp rise in interest rates due to high inflation. Among mutual funds, large-cap funds delivered a 5.47% return, while mid-cap funds delivered a 4% return. Investors, however, appear to be the only sensible option in 2023 to invest or continue to invest in mutual funds through SIP. Balanced Advantage funds with equity taxation are recommended for investors looking to invest in bulk.
Liabilities as an asset class
2022 has not been a good year for debt mutual funds, with most offering between 2% and 4%, with the exception of a credit-risk fund that delivered a 14% return.
Credit Risk Funds are mutual funds that invest in bonds rated AA or lower and are subject to high credit or default risk. As a caveat, only risk-conscious investors should consider investing in credit risk funds. The poor performance came as the RBI raised a series of repo interest rates in his 2018 to combat inflation. However, the silver lining is that interest rate cycles seem to have peaked, and investors may consider investing in long-term debt funds, which offer modest returns if they can hold out for two to three years. can be expected. Investors who find it difficult to understand the dynamics of interest rates and bond prices can simply invest in dynamic bond funds and let the fund manager allocate between long and short term papers.
For investors who cannot afford the risks of debt mutual funds, there are postal savings plans that offer higher interest rates than bank deposits. Some are eligible for tax benefits.
Gold as an asset class
Gold, which returned 13%, had a good year, outperforming stocks and bonds. Gold continues to benefit from the geopolitical crisis and continued market volatility and should do well in 2023. Physical gold has always been popular with Indian households as a status symbol rather than as an investment option. But be aware that fake imprinted gold is flooding the market and circulating.
Gold is negatively correlated with other asset classes and should be part of every individual’s portfolio, but experts suggest that exposure to gold should not exceed 10% to 15% of the total portfolio. I advise. Gold ETFs are superior to physical gold because there are no storage costs or conversion, billing or theft drawbacks. You can think of investing in schemes. The benefit of SGB is that you can earn 2.50% additional interest each year during your 8 year tenure. In addition, long-term capital gains will be waived if held until maturity.
Cryptocurrency as an investment option
Cryptocurrencies had a terrible year with prices crashing and exchanges like BlockFi and FTX collapsing. This, along with regulatory uncertainty and taxes, makes investing in crypto a risky proposition. Better.
Ultimately, a diversified portfolio is one that works well in good times and bad.
(The author is a former banker and CFA, currently teaching at the Manipal Academy of Hire. education, Bangalore)
