In terms of size of the economy with a GDP of $2602 billion, India became the 6th largest economy in the world in 2017. It surpassed France. In fact, according to a report by PWC India may also surpass the United Kingdom to become the 5th largest economy in 2019.
Factors such as strong demographic growth prospects, a large population, rich natural resources and a skilled workforce, make India a good prospect for growth in 2019.
There is no doubt in anyone’s mind that India is almost certain to continue to rise in the global GDP table in the coming decades. But what about 2019?
I plant a seed. I take care of it. My efforts pay off with flowers and fruits that bloom. If my plant is assailed by a cold wave, will I protect the plant and wait for sunshine or uproot the plant and forget the end objective?
People are talking about uncertainty, slowdown, recession, and when my investment will start growing.
Should I worry about these things? Should I switch to fixed income investments? If I switch, what if 2019 turns out to be better year for equity markets? It is quite possible.
2018 was expected to be better but markets went down. Who knows what next? Do I believe the headlines or fundamentals of the economy and its long term prospects?
Headlines are a form of anxiety. They don’t offer long term direction for your life goals. We attended series of meetings with fund managers in the first 15 days of New Year to understand what went on in 2018 and the way forward.
As an investor, expectations are rational. If I am invested, I believe I should keep gaining. Everyone feels nice if the market is linear. We say we are ready and understand equity but when time comes, we get cold feet. The fear of losing is strong. Nobody likes to lose.
The continued growth in consumption, better macros, and a new policy regime are sure signs of stability. The prudent thing to do is stay invested.
The bottom line: The smart way forward is to tolerate the short term pain and stay focused on your long term financial goals.