How ‘Pro-Growth’ Budget & Spending Will Help Newbie Investors

“Here’s why the first-time investor in the equity markets should rejoice at the pro-growth Budget”: Nilesh Shah

Nilesh Shah, Group President & MD, Kotak Mahindra Asset Management Company

(Photo: Altered by Kamran Akhter / The Quint)

The first-time investor in the equity markets should rejoice at the pro-growth Budget. The Budget comes with a stimulus for the economy with unprecedented spending on investment and healthcare.

Fiscal deficit is high but for the right reason, of bringing off budget-borrowing into the Budget and increasing capital spending. The Budget also lays the foundation for accelerated future growth through minimum government and maximum governance.

Laying The Foundation For ‘Accelerated Future Growth’

Strategic divestment of public sector units (PSUs) and public sector banks (PSBs) are game-changers for resource utilisation and contributions to the economy. Asset monetisation of government assets from roads, transmission towers, sports stadium, warehouses etc will raise resources without raising taxes. This will unblock resources to fund investments.

All this will result in higher growth and better corporate earnings in the years to come.

How To Participate In India’s Growth Story?

A first-time investor should participate in India’s growth story in the following manner:

• Draw up a financial plan according to your own risk profile and investment objectives. Take the help of a good mutual fund distributor or financial planner to do the same.
• Be an equal weight to equity as an asset class. Understand the concept of asset allocation.
• Be a regular investor through Systematic Investment Plan (SIP) in equity mutual funds or equity stocks if appropriate research is done.
• Be a long-term investor for a large part of the portfolio.
• Be ready for volatility in the market. Make volatility your friend through disciplined asset allocation. Buy when markets are low and sell when markets are expensive.
• If you want to be a trader, then learn the art of stop loss. If you want to be an investor, then learn the art of averaging.
• Focus on opportunities across all asset classes including off-shore investment opportunities.
• Balance your greed and fear. Markets will go up and down. Your time in the market will make money for you.
• Keep in mind inflation and taxes to make real returns.
• Be a disciplined investor to gain financial independence

(Disclaimer: Views are personal and do not reflect the views of Kotak Mahindra Asset Management Company Limited.)

(Nilesh Shah is Group President & MD, Kotak Mahindra Asset Management Company. He tweets @NileshShah68. This is an opinion piece and the views expressed above are the author’s own. The Quint neither endorses nor is responsible for the same.)