Navigating the Investment Market in an Election Year: A Common Share Market Investor's Guide

Thank you for your question. As an expert in SEO and a seasoned investor, I have compiled a comprehensive guide to help you navigate the investment market during an election year if you are a common share market and mutual fund investor. An election can bring about temporary shifts, but a well-thought-out investment strategy will help you remain steadfast and focused on long-term goals.

Understanding the Impact of Elections on Investments

Electoral Events as a Market Event: An election is just another event in the broader scope of market dynamics. While elections can bring about short-term volatility, they usually do not alter the fundamental economic structure of a nation in significant ways. Therefore, it is important to look for sectors that are less dependent on political whims.

Stable Sectors: Industries such as Oil and Gas, Consumer Durables, Electricity, Cement, and Infrastructure are generally less affected by political changes. Investing in these sectors can provide stability and potentially good returns.

Consult a Financial Advisor: Given the complex nature of the market, it is highly recommended that you consult a certified financial planner. Expert advice can help you navigate challenges more effectively.

Investment Strategies for Common Investors

Market Timing: As a common investor, it is important to recognize that market timing is risky and not always feasible. If you do not have extensive knowledge to research stocks, it is wise to invest indirectly through equity mutual funds.

Systematic Investment Plan (SIP): If you are investing through equity mutual funds, consider a systematic investment plan (SIP). Dividing your investments over a period helps mitigate risks and allows you to take advantage of market fluctuations over time.

Investment Plan for a Common Investor

Investment Allocation: If you have Rs. 5 lacs at your disposal, it can be allocated as follows:

Invest 1.5 lacs in Liquid Funds: Targeting 7-8% returns is a conservative approach, suitable for shorter-term goals or risk-averse investors. 3.5 lacs for Long-Term Equity Mutual Funds: Initiating a Systematic Transfer Plan (STP) over 12 months can help you benefit from dips in the market without timing the market correctly.

Market Movements Post-Election: It is important to understand that post-election, markets may experience some volatility, but there may be a gradual return to normalcy. Even if the current government does not continue, policy continuity is likely, ensuring sustained economic progress.

The Near Future of the Market: 2019-2021

Market Challenges: The coming 2 years may present challenges due to a looming US recession and the irrational valuations of most stocks after the 2017 rally. This is a good time to stay cautious and maintain a long-term perspective.

Investment Strategy for Long-Term Gains: Park your money in a liquid fund and start a 24-month STP. Investing in liquid funds ensures liquidity while allowing you to take advantage of market dips when they occur.

Next Bull Rally: The next bull market cycle is likely to begin in 2020, making it crucial to stay patient and focused on long-term goals.

Rangebound Market: Until then, the markets are likely to remain rangebound, providing an opportunity for steady gains through disciplined investment strategies.

By following these guidelines, you can navigate the complexities of an election year in the investment market. Remember, expert advice is invaluable in making informed decisions.

Disclaimer: Suggestions made are based on personal research and do not guarantee any kind of return. Always consult with a financial planner before making investment decisions.

For Further Queries: If you have any further questions on financial planning and investments, feel free to reach out to our free WhatsApp helpline: 91-91360-91371.

Happy New Year and Happy Investing!

Cheers,
Mahesh, TaurusCap Wealth Advisors