- The inflation
- The interest rates and
- The exchange rates
The foreign entities affect your investments in the capital markets as they buy and sell securities irrespective of the asset class : equity, debt, gold, oil or other commodities or any kind of derivatives. The domestic government can shield you on one front while the other forces may combine to ruin your asset values. That means you are chasing a moving target and needs keep pace with times.
First of all, do not have the feel that it is a life time happening, it will not happen again.
Second identify the assets, liabilities you want to fulfill in your lifetime and possible time span when you would accomplish your finnacial goals. Look at whether any point in life time your assets will pay for your needs. Many a Gap can be fixed with proper planning... and then re-look at your Financial plan.
When to look or re-look at your Financial plan?
as a student
on a first job
a job shift
first marriage
first child
first house
first vehicle
any life event...
or a shift in govt policy at home.......
or even an international event like the sub prime crisis of USA or the economic turmoils of Europe should trigger a review of your Financial plan
Companies reduce the size of IPOs, re-work their pricing anticipating a fall in capital markets key indices...
How did the Indian Equity markets welcome the news on Greece, Portugal, Spain and Germany ?
Recall the USA's subprime crisis and its after effects when the waves reached the Indian shore. In spite of JNREGP, JNRUM, wage rises to Govt employees, UGC packages to Teachers we experienced rise in prices, a freez on campus recruitments.....
the Reliance Power Ltd IPO price fixed at Rs.450.00. The markets turned sore and the prices tumbled at the bourses. and finally, a re-pricing by passing 3 for 5 bonus to look good and feel good.
It is not only equity, it affects debt too.
The interest rates goes up in the market. You hear about rising infaltion and gold prices sky rocketing. Comes with an appreciating rupee ...What about inflation? The measures taken from Budget 2009 till date and the Central Bank efforts did it tame inflation? Irrespective of the classification(Food/Non-Food/Fuel/Manufactured Products), it takes away your savings or investments unknowingly. And the Central banks across world continue trying their best to keep the three horses pulling in opposite direction in control.
Look at the way the RBI took it through. A similar situation is again on the anwil, triggered this time from Europe?
So you have to take charge of your life. Do not leave things to Government to tell you to save through the SEC 80 C under Income Tax Act 1961 or similar routes. You can surely make use of these avenues to reduce tax impacts and enhance value of your savings and investments through all legitimate purposes. Gone are the days of save, invest and forget. You have to look after your investments just like you look after your paddy field or children...
Reserve a day for looking at your investments just like you take a weekly off..
All the best.
