The Finance Ministry is all set to present the Annual Budget on 1st February 2017. Everyone is eagerly awaiting the Finance Ministers speech and there has been a lot of speculations regarding the outcome of that speech.
Demonetisation had caused Nifty to sink to 7900 points but the market has recovered since then. The fate of this recovery will again depend on the result of the budget. There is an expectation of a positive impact to counter the negative effect of demonetisation.
Many investors alter their portfolio by speculating on what may be the possible outcome of the Finance ministers plan. This is not a wise thing to do as the fundamentals of financial planning and investing – Stick to a log-term plan. Since there are many speculations it is not a good decision to change positions in anticipation of a positive outcome.
Be an Intelligent Investor:-
- Diversify your Investments – The Budget presentation does not alter the time at which a particular asset class performs. Don’t keep all your eggs in one basket.
- Don’t rely on the past results – The history may not necessarily repeat itself. Don’t make decisions keeping in mind past results.
- Research – Gather all possible knowledge regarding the investment decision you are going to make.
- Rumours – Stay away from rumours as people creating those rumours might want to exit with a profit at someone else’s expense.
- Cautious entry – Enter cautiously – when people start selling quality shares due to either fear or misinterpretation of some proposals of the budget the prices might dip which creates a good opportunity to enter.
- Relax – Fear, panic and volatility is the part and parcel of the market and over time the growth of a quality stock is reflected in its price over the period.
Two aspects the investor should looCapital gains tax and corporate tax are the two things to look for in the budget as an investor. The General Anti-avoidance Rules (GAAR) is set to roll out with an intention to curb tax havens and make it more difficult to avail tax exemptions
Don’t let the volatility unsettle you, stick to your long-term objectives as the budget is just a small event in your path leading towards wealth creation.