The Conflict between Russia and Ukraine has caused an economic catastrophe. The recent stiff sanctions on Russia by America and other western countries have majorly impacted oil, gas, metal, commodities, etc. The spillover impact of the war is clearly seen in inflation due to the largest exports. Well, the geopolitical tensions have hampered exports, Increased inflation, expenditure cycles, household, businesses, government, depreciating rupee compared to dollars, and defense supplies.

However, as the market is volatile; it is the greatest opportunity for investors to make their portfolio in the Indian stock market. Studies have shown a comparison between the 2008 stock market crisis and the Covid 19 pandemic. In both these cases, the Indian economy lead to an unprecedented disruption. Due to fear of crisis, many investors booked losses. Those who patiently waited could see how the Indian stock market in both cases has bounced backed.

Besides, we all witnessed that nifty hit above 17000 after the correction. People have also seen V shape recovery in the Indian economy and stock market. Expert advice would be that Investors should not be panicked or tizzy and focus on long-term growth. It is advisable instead of booking losses wait and hold your scrip in the portfolio. As stated above, we all have witnessed the resilience of the Indian economy in the past. Whether pandemics, scams or political upheavals; the market has bounced back and given returns to those who remained invested.

Here, are some smart investment tips for Indian Investors to keep in mind while looking at the fluctuating economy bars for trading:

1. It is advisable to buy shares or remain invested in blue-chip shares. These are the shares that might be fundamentally and technically high in valuation. At present, these are offered at low prices as compared to the previous pricing, due to FII Selling. So this will be a great opportunity for long-term investors to enter the market.

2. It is evident that the market has reacted with heightened volatility on any negative event like the Kargil war or Russia Ukraine crisis. Therefore, the Indian Rupee is low as compared to the US dollar. It is advisable to invest in the currency as experts believe the rupee will perform and showcase the Strong Indian Economy and will give long-term benefits to investors.

3. The market has been through pandemics, crisis, geopolitical crisis, recession, political upheavals, and world war in the past few decades. However, it has always managed to bounce back. So instead of panicking or overreacting to fluctuations in the market, an  Investor should diversify their investment in the Equity market, gold, bonds, currency, commodity segment, real estate, and fixed deposits. This way, the long-term consequences will be beneficial for the Indian Investors.

4. The studies suggest that despite geopolitical tension, India has outperformed. The Indian market is stable and the market has digested the current situation. After all forms of ups and downs, FII is interested in the Indian market. It clearly represents the future growth of the Indian market. Indian Stock market has been a great source of wealth creation for India as well for FIIs over a couple of decades. In support of the above-said statement, we would like to inform you that recently Japan has offered $42 billion in investment. Similarly, Russia offered discounted oil to India which again shows the trust of the world with India.

5. If Investors are confused due to market volatility, then they can start investing in mutual funds. It is a stable option with a higher amount of Interest. Investors can invest in mutual funds through monthly  SIP (systematic Investment plan) or through Lumpsum.

As per Times of India, the Russian Market might be removed from MSCI/FTSE global indices. It will also lead to an increase in weightage for Indian equities which are directed towards higher flows. These are the signs investors are going to grow in the future run. As an expert, we would suggest taking the advantage of this time to obtain more profits in the future. You must also know that Ukraine -Russia conflict has effectively influenced the crude oil prices. Due to this change, the Reserve bank of India is re-thinking its policy normalization schedule which might affect inflation and interest rate.

Cheers to your Financial Journey!

Deepanshi Arora

(Financial Educator, Soft Skills Trainer, and Image Coach) 

The world somehow managed to survive the haywire caused by the first wave of COVID 19. However, it wasn’t long enough when the second wave hit the nation and shook the economy in the most deprecating way possible. It won’t be wrong to say that people are struggling with the volatile changes in ongoing financial situations in the market. Then there is inflation coming in the way of home loans, child education, and other responsibilities.

As Warren Buffet put it, “Never depend on a single income. Invest to create a second source.” All in all, this pandemic has made us realize that life is unpredictable. We cannot rely on private jobs or uncertain businesses in a market that strives during a global shutdown. Aside from the usual expenses, what we need is an unwavering and robust source of income or just the savings we can use during such phases.

It’s important to build a safety net of savings, investment, and cash in hand for our present and future. This is the only efficient way for your family’s financial well-being. That safety net entails passive income. A passive income can be described as the earning that doesn’t consume the ordinary 9-to-5 time duration of our lives. While there may be different ways of earning money through numerous means, investing in the stock market with proper planning is also a way to go.

There are different financial vehicles through which we can create wealth from the stock market. Many investors invest in the stock market instruments for a short-term period to a long-term period depending on their goals. Studies have shown stereotypical investment options like bank FDs, and RDs. But these sources give only 5 to 7 % of interest. On the flip side, investing in the stock market has given nearly 15% of annual returns in the past decade. There are different modes of investment in the stock market like Mutual Fund, IPOs, Bonds, equity, debentures, etc.

Investment in mutual fund 

Mutual Fund is the financial instrument that pools the money from people at large and diversifies the investments in the basket of stocks, bonds. Each investor owns a unit of fund which represents a potion holding of the scheme. These funds are managed by the qualified fund manager of asset management companies. Investment in mutual funds is one of the best investments as it diversifies the risk.

Mutual funds have a basket of different stocks in which it pools. Thus, the risk is much lower than owning an individual stock. Another benefit of investing in a mutual fund is starting with a small investment as individual stock need a large amount to buy each stock on the other side in mutual fund we can start investing Rs 500 per month.

The early you start early you see the magic of investing. It is very important to diversify and allocate your income as per the hybrid model. Hybrid means a mix of equity and debt instruments.

Allocation as per age 

In your 20s 

The early you start the early you get benefits. You must know that this is the time when you can contribute the majority of your income to a lucrative investment. Evidently, an investment in this decade has the greatest possible growth. 

Preferably 70 to 80 % of your Investment should be in direct equity and pure large-cap funds as the risk appetite and growth changes are more in this period.

In your 30s 

This is the time when we plan our life in terms of asset building and starting a family so we may not be able to contribute to investment the way we can contribute in the 20s 

Preferably it has 60: 40 ratios i.e. mean 60 % in equity and 40 % in debt (bonds, debentures).

In your 40s to 50s

This is a time you need to buckle up down as you are in mid of your career, majorly you are thinking for your kid’s future, paying off loans, and close to your retirement. 

 Preferably its 50 to 50 % of ratio i.e. 50 % in equity and 50 % debt

In your 60s and above 60s 

This is a time you are getting close to retirement or retired. This is the time to switch to slow and moderate options. At this period, it’s time to focus on income including dividends, bond interest, etc. So invest in large-cap and blue ship companies  

Preferably, stocks should be 30 % to 50 % and bonds should be 50 % to 70%.

There are so many advantages in investing in mutual funds like an investment that can be made in lumpsum or SIP, diversification of stock (large-cap, mid-cap, and small-cap), redeemable, close and open-ended schemes, professional assistance, regulated and approved by governed body SEBI. Undeniably, it’s a new-age investment vehicle.

Investing in stocks

It gives you a passive income in the form of capital appreciation and payment at regular intervals from the company in the form of dividends. Dividends are paid per share the more shares you have the higher amount you earn. Dividends provide a low risk for the budding investors to start with and benefit a lot in later in investing years. 

Dividends are the best way to have a second income as earning dividend have no active participation of an investor, Investor enjoys earning as interest which is higher than FDs in long run depending on how long and how much quantity you own.

Let’s understand this with an example. You purchase a property and you rent it out which is passive income for you. On the other hand, you purchase shares of the company and you earn dividends on an annual basis as a final or interim dividend by a company. In both cases, you have done one time of effort and enjoyed a fruit at a later stage.

Investment through Initial Public Offers

IPOs help you to earn profit in a very short period. It has the potential to bring in big returns. It has price transparency and information is more accessible so that you can invest in it consciously. It is an attractive option to buy at low and sell at a higher price.

Investment in Bonds 

A bond is a fixed-income investment, which provides a stable return. Bond is useful to the time for early retirement and one who is new to the market. A bond is a good option to use to reduce tax burdens.

Stock market Investments helped many people to earn an additional income with little time and effort. It helps you to improve finances and also helps you to build your financial freedom for the future which supports your desired life objective. However, Stock market investment is not about getting quickly rich easily overnight, they provide money over time, not in one night.

It depends on how and with whose help you are investing. Our advice is to start investing early but it said it’s never too late to start to grow and glow in life. Seek out our financial professional help who can give a road map for your financial journey for your better present and future.

Cheers to your Financial Journey!

Trading Gurukul.