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Holi - Time to Purify Your Portfolio & Splash New Colours

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 "You only have to do a very few things right in your life so long as you don't do too many things wrong" - Warren Buffett

The two most celebrated festivals of Hindu culture – Diwali & Holi, shows us the way how to lead better and healthier life. For Diwali we cleanse our home and surroundings and for Holi we purify our home & surroundings on ‘Holika Dahan’ and then splash the new colours of life on ‘Dulhandi’, the following day. The colours of bond, trust and friendship among our fraternity who stand by us at all times – good or not so good.

Coincidentally Diwali comes midway the financial year and Holi comes towards the close of it. What we do to cleanse and purify our physical and spiritual life, the same need to be applied to our portfolio for a financially healthy life. While midway the financial year we should scan our portfolio for cleansing, we should purify it and splash it with new colours towards the close of the year.

Purifying and splashing new colours to your investments means – assessing your financial situation and risk appetite in the light of any new developments in your personal life and general environment that may have financial implications and review & rebalance your portfolio accordingly. If needed then splash i.e. include new investment products in your portfolio.

Impressed by glittering performance many a times we collect froth in the process. Everything that glitters is not gold and the periodic corrections in the market help us identifying those froth or such investments that do not match one’s risk profile. This is the high time that you identify such investments that were included in the portfolio but do not match your risk profile and get rid of them.


Splash New Colours:

You must consider reviewing /adding the following colours to your portfolio:

Mediclaim: With inflation treatment is getting costlier. Reassess your health insurance requirement and increase your cover. Also check what your policy does not cover and if there is better option to it. You may use top up plans offered by all insurance companies at very low charges to increase your cover.

Life Insurance: This is the time to reassess your financial liabilities and ascertain the insurance cover you should have. Buy only term insurance plan that provide you very high insurance cover for a very low premium. Additionally you may also consider buying cancer and heart care policies being offered by many insurance companies in addition to regular mediclaim policies. Such policies provide you a lumpsum or staggered payments that you can even use for non-medical requirements.

Contingencies Funds: A little about four years ago, Covid has exposed a lot many people to the realities of uncertainties of one’s income. While your income may get disturbed but your basic expenses don’t. So rework your needs of contingencies funds. We advise you have at least one year’s expenses in safe and liquid assets.

Debt: Most option in debt investments offers you fixed guaranteed returns. Choose your option based on taxation, liquidity, inflation, security etc. of the option. You may consider bank or post office deposits, various types of debt mutual funds, government and corporate bonds etc. Peer to Peer lending is another debt investment which is gaining popularity among niche investors.

Gold: It is a standard hedge against inflation over long period and an asset that generate exceptional returns during time of uncertainties in the economy. It is also considered international currency. We recommend 5%-15% investment in gold. You may choose from sovereign gold bonds (available in secondary markets) and gold mutual funds to invest in paper gold – the best way to invest in gold. You may also consider gold schemes offered by PSUs like MMTC who offers you the option of anytime redemption and also receive physical gold or its value on redemption.

Equity: For wealth creation there is no alternate to equities. While it remains highly volatile in short term, over long term – say 10 years or more it has always beaten all other asset classes for returns. Use mutual funds if you are not good at picking good stocks. And SIP is the best way to create wealth silently over long period. A small SIP of Rs.10,000/- a month can get you over one crore in just 18 years. Small drops make an Ocean.

Loans: Many a times it is observed that it’s better to avail home or education as they are available at cheaper rates comparatively. Personal loans should be used only as last resort and credit card loans should be strict NO for individuals. With inflation easing and RBI has already started cutting its policy rates, expect these loans to become cheaper from here. So if you are carrying loans then consider pre-paying or switching loan to another agency who charges lesser interest. Don’t forget to check the switching cost.

So what are you waiting for? Pick up your investment portfolio and financial plan. Purify (review) it and splash new colours i.e. make changes in the portfolio as assessed. Talk to your financial advisor to help you do this.

Team InvestmentMitra wishes you a very Happy and Joyous Holi!

  www.investmentmitra.com              info@investmentmitra.com         9254673750

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