As we head into 2023, many of us may have made a New Year’s resolution to improve our financial health and work towards a more secure future. But carrying out a wise financial or investment plan on your own is tricky.
The stock market underperformed in 2022; the S&P 500 had its worst year since 2008 when the global recession wiped out nearly 40% of the index’s value. Some economists and financial analysts continue predicting a looming economic recession that could increase market volatility this year.
It’s impossible to say what the market will do in the near future, so focus on your financial position and goals to evaluate the best course of action as the year unfolds.
For instance, it probably doesn’t make sense to make rapid changes based on short-term volatility if the majority of your investments are in a retirement fund and you’re still relatively young. On the other hand, if your time horizon is shorter and you plan to retire in the next few years, capital preservation should be your top priority; it may be wise to shift your assets to low-risk investments.
In light of this, a wise question to ask yourself is: What should be your ‘SMART’ investment mantra for the year 2023?
Before you invest, set goals, and while you’re at it, think about inflation as well. The idea is to develop short- to long-term goals that are ‘SMART’ (specific, measurable, achievable, relevant, and time-bound).
- Take a quick overview: If you don’t know where you stand financially right now, you can’t make any significant changes in the new year. Your net worth, which is a snapshot of your whole wealth, is an excellent place to start. Subtract your liabilities from your assets. By doing so, you’ll be able to determine if you’re in the plus or the minus, plan and prioritize your spending, saving, and investing, and provide a baseline by which to gauge your success over time. It is also a good opportunity to check your credit report to ensure that your accounts and liabilities are appropriately recorded.
- Prioritize and set goals: Ask yourself, what are your top priorities for this year? Prioritize your goals, whether you wish to save more, pay off debt, build an emergency fund, or help your family, so you know where to put your money first.
- Spend with caution: Make a budget that covers both your current living expenses and your long-term goals. List all of your monthly expenses, and put your goals into consideration when making spending decisions. Moreover, if you go over budget, act with caution and pay attention to how you’ll cut back on your spending in the future to avoid getting into more debt than you can handle.
- Expect the unexpected: Be sure you’ve got proper insurance coverage. Don’t forget to create an emergency fund in an account that is simple to access, ideally with enough money to cover three to six months’ worth of living expenses in the event of an illness or job loss.
Investment Tips for 2023:
- Analyze the business model’s viability in the Indian context and whether the company is likely to profit from the macroeconomic forces affecting the Indian economy.
- Invest in companies that have an increasing or consistent revenue stream, as momentum may take a backseat in 2023.
- A concentrated portfolio with a business having a competitive advantage and available at a reasonable price will be far better.
- Bonds and other debt securities that benefit from rising interest rates will be imperative in the future.
- Corporate bonds issued by fundamentally sound corporations will yield higher returns.
- The banking stocks are projected to gain from a pickup in credit growth and house sales.
- The government’s infrastructure drive will most likely assist related businesses and subsectors.
- Only invest in stocks if you can hold them for a medium- to long-term period. Better yet, invest your surplus funds in debt securities and completely shun equity.
- Watch out for industries that are likely to undergo significant pushes or reforms.
- Think about “finding the next big trend”.
Which segments will shine brightly in 2023?
|Reliance Industries, Adani Group (Adani Enterprises, Adani Green Energy), Tata Power, Borosil Renewables, JSW Energy, Sterling & Wilson, etc.
|Tata Chemicals, Laxmi Organic Industries, UPL, Deepak Nitrate, Aarti Industries, PI Industries, etc.
|Digital Transformation and Inclusion
|TCS, Infosys, Wipro, Jio, Bharti Airtel, SBI Cards & Payment Services, HDFC Bank, IndusInd Bank, Route Mobile, etc.
|Tata Motors, Mahindra & Mahindra, JBM Auto Ltd, Olectra Greentech, TVS Motor Company, Ashok Leyland, etc.
Note: The end of a fiscal year is critical for making long-term financial decisions. Irrespective of your current strategy, this could be a perfect moment to work with a wealth manager who can provide you with customized and impartial guidance on how to achieve your goals. Working overtime for fortune isn’t enough; your wealth should also work for yourself. Consequently, if you want your money to grow for you, invest it.
- Bonds and large-cap equities offer relative yield options that can help you secure your yield. Bonds and other debt securities that benefit from rising interest rates will be imperative in the future.
- Consider giving structural financial themes, domestic cyclical themes, and investment-driven themes long-term value.
- Using defensive assets, strengthen portfolios against the unexpected.
- Expand your horizons using non-traditional strategies.
- Think about “finding the next big trend”.
Written by: Arpita Chatterjee
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