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When we look at the Indian stock market today:
It is the most expensive emerging market on a price-to-earnings ratio. It’s been in the top two for a while now It has been significantly underperforming the broader emerging market index in 2019 Volatility has risen significantly in the last 3 months even as the market has been range-bound When we look at everything occurring in the world right now, I can only think of how many ways things can go wrong for markets in India and make a mockery of this valuation.
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Quite a bit has changed since I wrote the last post. After more than a decade, the government reintroduced long-term capital gains for equities and equity mutual funds. Does that change anything? Lets see
Are Equity Mutual Funds still worth it?
To answer that, we need to look at two factors.
What is the rate of return on Equity MFs vs other asset classes? What is the tax treatment on Equity MFs For the first, there’s a lot of articles such as this and this that show that Equities and Real Estate have been the asset classes that have outperformed over the last decade and longer.
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Personal finance isn’t the most interesting topic to most people but it should be one of the most important ones. To anyone working a job in the private sector in India, your retirement corpus is more or less your responsibility, and that’s where an understanding of investments, asset classes, risk and return is important.
There’s a few principles for building an investment corpus
Diversification Risk Appetite Age Appropriateness Diversification is all about not putting ones eggs in one basket.