Caution raised by many wealth managers and investment gurus regarding stock market bubbles. They have shown concerns on stocks investment and advises the investors not to depend on equity markets for all their savings. A large pool of Indian investors has shifted their investment from debt to equities, since returns from the stock market is outperforming the others.
Equities have been the best performing asset class over the last four years. In 2017, the Sensex rose 28.47 per cent, outperforming fixed income and gold which have been performed by average 8-10%. Income funds and dynamic bond funds category returned 3.97 per cent and 2.37 per cent, respectively, in 2017; while gold funds returned 1.38 per cent.
Given this poor returns from assets like gold and debt mutual funds, and a continuous rise in the equity market, investors may look at moving money from debt, fixed deposits and gold to equity mutual funds. There is considerable rise in numbers of first time investors.
Investors are advised not to put all eggs in one basket. The goal of any investment is to get the balance returns adjusting both risk and return. A well diversified portfolio has lower ups and downs and grows steadily over time. Investors are advised not to pour fresh bulk money into equities, where valuations have gone through the roof. The earning of corporate are slowing down year to year. Further, smart investors should stick to their asset allocation and within equities opt for large-cap mutual funds or stagger their investments over the next 12 months, to take advantage of any volatility in the interim.
Inputs from ET