Six Key Factors for Savings and Investment Success in 2016..!

Six Key Factors for Savings and Investment Success in 2016..!

From QuantumMF

The New Year 2016 has finally set in and for those of us who had a weekend holiday, today marks the first day of the year at work.

A cold grief has engulfed the country at the start of the year with the terror attack on the IAF base and the Manipur earthquake. However one can still harbor hopes and look forward to better things.

On 1 st January the UN ushered in the New Year with an ambitious 2030 plan, which is aimed at ending poverty, hunger and assuring gender equality in its member nations over the next 15 years. Closer home, the odd-even scheme experiment took off with Delhiites plying only their odd number plated vehicles on roads.

At Quantum we look forward to a great year managing assets, continue being good stewards for our investors like we have always been.

Coming to your investments we just want to remind you that there are only 6 key things that determine that the long term success of your investments - only 6.

And they are:

1 How much you manage to save & invest

2. How long your investments are allowed to compound

3. Your asset allocation

4. Choice of investment products

5. Fees you pay on those investments

6. The taxes you pay

(1)                 It all begins with the virtue of saving for the future from your income. As the savings are moved to various market-linked instruments they turn into investments. And therefore so long as one does move his/her savings from the bank account to such instruments then he / she remains stuck as a saver and never climbs the wealth ladder to become an investor.                   (2) Greater the number of years your investments compound larger the potential final corpus. Compounding makes a serious difference in the long term. (3) Asset allocation is all about how your investments are assigned to products of the different asset classes like equity mutual funds, bond funds, FD, gold. (4) And without doubt your choice of schemes, stocks or other individual product has a say on your investment success. In case it seems you made a wrong choice it is wise to consult an experienced advisor and weed it out of your portfolio without sitting on it a long time. (5) The providers of your investment products would charge a fee for their service. In mutual funds this is termed expense ratio. High fees eat into your returns, so keep an eye on costs. (6) Finally taxes come into the scene. If you wisely choose and manage your investment profile your tax outgo can be reduced to the minimum.

Did you notice that the list of  key factors affecting your long term investing success does not include GDP projections, inflation levels, political developments, not even stock market movements? 

Macro events tend to impact markets in the short run and the markets themselves can be quite fluctuating in the short run. Yet these may not stand in the way of your returns in the long run if your portfolio is carefully created with proper asset allocation, time to time rebalancing and patience.

Asset allocation deserves some more emphasis at this point. How you allocate your investments has a greater impact on your investment success in the long run than whether you always had star performers in your portfolio. 

Moreover with time your portfolio would need rebalancing to ensure the allocation is appropriate to benefit from the changing conditions in your life stage as well as the markets. This requires time and efforts; an asset allocation fund could be a good bet here.

Maintain focus on these 6 issues and take the rest easy. Somebody rightly said that wisdom is in knowing what to overlook. 

Don’t be too set on events or you might find no time suitable to invest. You’ve probably heard the proverb, “whoever watches the wind will not plant; whoever looks at the clouds will not reap”. In other words, if a farmer waits for perfect weather he or she’d never plant. If they watch every cloud, they’d never harvest.

So don’t wait for this Government’s 3rd Union Budget set to be released next month. Not for the Met’s monsoon forecast for La Nina this year. Not even for the foreign or domestic Central Bank policy announcements. Just stay focused on your goals, consult your financial advisor and stick to the plans with regular assessments. And the rest should take care of itself. Happy investing in 2016!

Risk Factors: Mutual Fund investments are subject to market risks, read all scheme related documents carefully.

Please visit - www.QuantumMF.com to read Scheme Specific Risk Factors

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