FINANCE TIP OF THE DAY
Can you afford your loan?!
Know the quantity of loan you can afford. The banks may sanction loan based on your income but you should look at your monthly expenditure and see if you can afford the maximum that banks offer. As a thumb rule, remember not to let your credit exceed 40% of your income!
Gold Funds Overpower the Market as Equity Funds Undergo Fall
While diversified equity funds were expected to outshine the market for an increased amount of time, they underwent a significant fall as they were gnawed by the forces of high interest rates and inflationary pressures. Investors stayed away from this instrument for the fear of global slowdown, which was expected to hit equity funds the hardest. Several underlying stocks trembled with the effect of the global economic meltdown, leading to a fall in the position of diversified equity funds across an array of global markets. A decline could also be seen in the performance of funds pertaining to the infrastructure and banking sector, with the Reserve Bank of India making strong hints to maintain an anti-inflationary stance with respect to the monetary policy action of the region.
In this market upheaval of sorts, it was interesting to see a rise in the performance of gold funds, retaining its title as being a ‘safe haven’ for several investors. With investors being troubled by thoughts of the depressing economic conditions, along with Euro debt fears and the economic slowdown world-wide, gold funds witnessed an appreciative gain of almost 20%. Also, debt funds out shined other funds with positive returns in the form of yields, while short-term and long-term debt papers flattened, devoid of any major upswings. Hybrid funds, which boast a balance between debt and equity funds, displayed a lack luster performance too, in spite of claiming to provide investors with the benefit of both income and growth under one investment plan. It was also interesting to note on how equity funds that had made investments in small and mid-cap stocks performed much better as compared to large-cap funds in the region.
One most important pointer that you as an investor need to bear in mind is that gold funds need to opted only if you have been an old player in the market wherein your portfolio has been managed for at least 2-3 years and has become fully robust. Although this asset has been termed as profitable venture, investing more than 5% of your total portfolio value is not advised.
With the bright performance of gold funds, gold traders are all set to take advantage of the festive time in the country, by piling their stocks ahead of the shopping season, taking full advantage of its ‘safe haven’ tag. While short-term and long-term debt papers continued to remain constant on the same level, the bond markets experienced a drop due to inflationary pressures. However, bond markets could breathe lightly as Brent crude oil prices performed well, implying a significant reduction in the import ill, as well as the current amount deficit. Domestic mutual funds also witnessed a slight debacle in the purchasing rate, as compared to its previous performance in earlier months. In such scenarios, prudent investment decision making is called for.
You do not want to be the type of investor who has to raise funds through debts like a personal loan or any other type of loan in order to bridge the gap that your investments could not completely provide. The pursuit of procuring a loan is not very difficult but the repayment might make you feel that pinch. With high interest payments, the repayment of your EMIs may burden your finances by which you might not be able to provide for other financial requirements. In order to avoid such hassles, make sure that you make prudent financial decisions in order to build a strong portfolio. Diversify your portfolio once you are able to set aside a size able amount, at least 40% of your income for the sole purpose of investing. By this you can sit back and complete all your responsibilities.