Investing: Paras Adenwala
I am 27 and have been working for the past two years. I have invested in PPF and also hold fixed deposits worth about Rs 2 lakh. I want to take exposure to equity. How much should I start with? And, how to do it? I have an investible surplus of Rs 1 lakh.
Considering your age, you could invest around 60-65 per cent of your investible surplus in equities, gradually. This can be done through mutual fund schemes. You could start a Systematic Investment Plan or a Systematic Transfer Plan, with any of the leading mutual funds.
I am 62 and have invested Rs 11 lakh in mutual funds over the last six years, including equity diversified and thematic funds (pharmaceutical and banking). My portfolio has appreciated around 10-11 per cent, with thematics doing better than the diversified ones. Should I stay invested or book profits?
The Nifty has returned more than 60 per cent in the last six years. Hence, there is a clear need to reshuffle your diversified fund portfolio. You may want to consider replacing the underperformers in that segment, with consistent outperformers. Since equity markets are expected to outperform other asset classes in the medium to long term, please do not reduce your exposure to equities.
For three years, I have been holding stocks of some big private banks. The mid-quarter policy review this month is likely to cut banks’ cash reserve ratio (CRR) further. Is there any strategy I should follow to be on the safe side?
A cut in the CRR would be beneficial for the banking sector. Therefore, hold on to your current exposure. Also, the financial services sector is anyway going to do well in the long term and is an important sector.
I am a conservative investor and invest in mutual funds, not stocks. Is my investment strategy right? Also, I am not well versed with the commodity market. How should I invest in metals, other than trading live on it?
Since you are a conservative investor, your strategy to take exposure to equities through the mutual fund route is sensible. However, dabbling in commodities is not in sync with your conservate approach. Commodities are prone to higher volatility than equities. So, try to stay away from it.
What are your views on small- and mid-cap stocks? Are they good investment bets now?
Yes, they are good bets, for the long term. However, you would do well to invest in these through the mutual fund route. And, keep only 10-15 per cent of your portfolio in such funds, as small- and mid-cap stocks tend to fall as fast as they rise, since they are high beta stocks.
The writer is managing director & principal portfolio manager, Capital Portfolio Advisors. Views expressed are his own. Send your queries at yourmoney@bsmail.in