2015 is here. And things are on the move already. For starters, things look more positive this year because of the policy dynamism shown by the new government in particular. That apart, falling interest rates, a possible acceleration in growth rate and lower crude oil prices are the likely triggers to get the Indian Economy going great guns in 2015.

So, how can you make the most of it?

  • Time for tactical allocation in Debt fund 

RBI measures of last one year turning positive now in lowering inflation as targeted 6% by 2016. Interest rates are likely to come down in 2015 because of  lower crude oil prices which helps in lowering current account deficit, range bound currency on account of better fund flows and comfortable forex reserve. Interest rate and bond yields are inversely related. Softened bias towards lower rates gives an opportunity to earn better return in debt funds. That’s why, it’s time for tactical allocation in Debt fund to lock in returns.

  • Turning growth cycle—ride on it—-save more

Growth cycle in our economy is turning and will be back with 7-8% growth over next 3 years (as witnessed in 2001-07) after a period of lull. The main reasons for this are as follows: 1)The true impact of policy initialization by new government will be visible over the coming three years. (Reforms announced – Diesel price deregulated,FDI increased in Railways & Defence,Moderation in MSP hikes,Environment Clearance process online,Financial inclusion plan and more.)  2)With lowering rates, credit off take will slowly pick up, resulting in more capacity creation over 2-3 years which will lead to the growth.  So 2015 mantra is allocate more to investing in equity to benefit from turning growth cycle.

  • Invest with the plan in mind

What’s the plan? Well, we are very conscious to save money. But saving is not investing. In 2015 look closely at the importance of making plans and investing in those plans with the goal in mind. This will get you to the place you want to be.

  • Systematic is still the way

Systematically speaking, we feel investing systematically every month is the way forward in more ways than one. Equity markets may consolidate before roaring upwards again. Also periods of lower inflation coincide with lower corporate earnings for a short run until the capex revival and full utilization is underway. If you start investing systematically now, you can ride the entire bull cycle.

  • Emphasis on Financial Assets

What are Financial Assets. They are not physical assets. Our love for physical asset like real asset and gold may multiply with lowering prices of both, but you shouldn’t ignore the value of long term happiness in financial assets for these bits of instant gratification. We strongly believe the financial asset class is the best class to be in once you have finished financing your home.

The bottom line in 2015 should be to concentrate more creating financial assets which are tactically sounder and will reward you better on the road to life.

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