Like earlier Budgets, expectations are sky-high this time too from the investors community. In fact, the government, in the recent past, launched several new initiatives targeted at making investing more simpler as we move ahead. The regulators too are burning mid-night oil to safeguard investors’ interest. Although many changes were brought in for their benefit, there were some disappointments from equity markets, but for long-term investors it was hardly a cause for concern.
Avenues are aplenty when it comes to investment opportunities. Now, expectations have started building up as to what lies in the store for investors in this years’s Budget, to be presented on February 29, 2016. Here are what investors can look forward to.
Equities: No doubt equities are the main vehicle for long-term wealth creation. The piece of advice remains more or less the same i.e. to stay invested. A one or two-year underperformance is hardly a concern for any long-term investor. The year 2015 was a good year as investors started showing faith in investing through mutual funds. The manifold increase in number of equity mutual fund folios was a positive sign for the markets. The faith should continue and investors should keep investing. The entry of long-term funds through EPFO in ETFs may be a starter for growth of ETFs in our markets. Investors may see more of them in the coming financial year (2016-17). On the other hand, the emergence of direct plan has benefited and this year, we will see new investing platforms for direct plans investors. Thus, the changes will continue and investing will be lot more easy. So stay invested or start your SIP.
Fixed Income: There may be some concern for investors. The interest rates are slated for a downward trend and with the recent news the rates in small savings schemes like PPF, NSC, SCSS or Post Office schemes may be pruned. This does not augur well for investors and they may have to relook at their selection of fixed income avenues. Watch out for the changes in interest rates and make a wise selection. Debt mutual funds have lot of opportunities and so utilise them.
Bonds: They were in demand in 2015 and this year may not be an exception. Gold sovereign bonds will be a welcome move for gold investors. There will be more issue of tax-free bonds by the end of this financial year, which will give investors, especially retirees, more options. Keep allocating part of surplus to these bonds.
Budget: Lot depends on what comes out in the ensuing General Budget. There may be more bonanza for investors on the taxation front. The scope of tax-free bonds in next financial year will depend on the Budget provisions. Wait and watch.
More investing options, unbiased advice, emergence of technological means - all will make the investing experience smoother this financial year.
(The writer is a Sebi-registered as investment adviser and Founder of JS Financial Advisors)